Cholamandalam Investment and Finance Co. Ltd. (CIFCL), a Murugappa Group company, has received an investment of $222 million from a foreign investor anchored by the IFC.
This is the company’s first U.S. dollar-syndicated deal since January 2019, when RBI permitted NBFCs to tap into offshore credit market. CIFCL would use the funds to help small road transport operators (SRTOs) and micro, small and medium (MSMEs) borrowers, especially in the rural and semi-urban areas.
The present round of funding was anchored by IFC, a member of the World Bank Group. Of the total amount, IFC invested $92 million and the rest syndicated from First Abu Dhabi Bank ($50 million), MUFG Bank Ltd. ($50 million), National Bank of Ras Al-Khaimah PJSC ($20 million), and CTBC Bank Co., Ltd. ($10 million), said a company statement.
“IFC’s strong commitment to the NBFC space and support in helping us access credit from foreign investors will reinforce the important role played by the NBFC sector in providing last-mile credit. This arrangement, led by IFC, has helped CIFCL tap a new investor base for its borrowings at competitive rates, which will support its growth plans,” said Arun Alagappan, executive director, CIFCL.
CIFCL’s core business is providing commercial vehicle finance and loan against properties. It had entered the affordable housing finance segment recently. Almost half of CIFCL’s clients are in low-income group and 80% of them are first-time buyers or drivers-turned-owners. The firm plans to expand further in these states and in rural and semi-urban geographies.
This is the third time IFC has invested in CIFCL. Earlier, it invested in 2010, followed by 2014. Between 2011 and 2017, CIFCL reached 1.26 lakh SMEs and 6.5 million micro-borrowers. The fresh fund infusion will help the company expand its reach and create jobs.
“Cholamandalam’s wide reach amongst small road transport operators and MSMEs makes it the right partner for us to reach these underserved segments,” said Jun Zhang, IFC country head, India.
