Shriram Finance plans to raise up to $1.5 billion from foreign investors in FY25, says CEO

Shriram Finance, one of India's biggest non-banking financial companies (NBFCs), plans to raise up to $1.5 billion from foreign investors in the financial year 2024-25 to diversify its borrowings, news agency Reuters reported, quoting the company's Chief Executive Officer and Managing Director YS Chakravarti.

“We are targeting to raise anywhere between $1.25 billion to $1.5 billion (in fiscal year 2024-25),” through a mix of loans and bonds, Chakravarti told the news agency on Tuesday, August 27. 

Shriram Finance shares closed up 2.35 per cent at ₹3,234.85 after Tuesday's market session, compared to ₹3,160.55 on Monday. The agency reported the news after trading hours.

Shriram Finance has raised $300 million out of the $1.5 billion needed this financial year and plans to raise another $300 million to $350 million in the coming months, as per the report.

The Reserve Bank of India (RBI) in November 2023 asked all lending entities to set aside more capital on loans given to NBFCs like Shriram Finance. This made fund raising from local banks more costly, according to the report.

The news agency quoted analysts stating that non-banking lenders with high reliance on domestic banks are facing funding constraints after the RBI order.

Chakravarti said Shriram Finance, which provides loans to buy commercial vehicles and lends to small and medium-sized companies, has not seen any funding pressure due to the firm's higher credit rating and multiple-source borrowings.

“It's the smaller players and the companies that are rated below AA which are getting squeezed. For us, it's not too much of a concern because my entire bank borrowing in my total liability portfolio is about 24%-25%,” the report quoted Chakravarti as saying.

Shriram Finance's loans from banks were 24.8 per cent of its total borrowings; the borrowings through foreign currency loans and bonds made up 8.3 per cent and 5.8 per cent, respectively, as per the report.

The non-banking lender estimates its assets under management to increase 15 to 16 per cent in the July to September quarter. This is 21 per cent slower growth than the previous quarter, which was fuelled by higher lending in the large ticket-vehicle segment.