Kolkata: Srei Equipment Finance, a wholly owned subsidiary of Srei Infrastructure Finance, has announced that it has received expressions of interest from international private equity (PE) investors for a capital infusion of up to $250 million in the company. The PE funds are: US-based Arena Investors LP and Singapore’s Makara Capital Partners.
In November last year, the Reserve Bank of India (RBI) appointed an auditor to conduct a special audit of Kolkata-based NBFC Srei Infrastructure Finance and Srei Equipment Finance (SEFL), one of the major players in the construction and mining equipment financing space.
SEFL’s Strategic Coordination Committee (SCC), chaired by independent director Malay Mukherjee, will coordinate, negotiate and conclude discussions with the PE investors to bring the capital into the business and advise the management, Srei Infrastructure Finance said in a stock exchange filing. Ernst & Young (E&Y) will be advising the committee on the proposed fund raising exercise.
“The SCC is running an independent process for investor identification and has received expression of interest (EoI) from Arena Investors LP and Makara Capital Partners. This process is being carried out in parallel to the debt realignment plan. The SCC will engage in discussions with the potential investors to raise fresh capital for the business, which will provide cushion against the pandemic-induced stress in the Indian financial services space,” the statement said adding the SCC will also be the nodal point for a comprehensive cash flow realignment plan with banks and financial institutions and for all external service providers, including investment bankers, lawyers and consultants.
During 2019-20, the management of Srei Infrastructure Finance (SIFL) had carried out the company’s slump sale to SEFL which involved the transfer of businesses, assets and liabilities (including the liabilities towards outstanding non-convertible debentures issued by SIFL) in a bid to grow the equipment financing business and gradually bring down exposure to project financing where the progress has been slow due to various policy hindrances.
However, some bankers told FE that the RBI’s decision to go for a special audit may be, among other reasons, related to the process of the slump sale of SIFL to SEFL.
Srei has a consolidated debt of around Rs 20,000 crore from Indian banks and around Rs 10,000 crore through bonds and from other financial institutions.
Meanwhile, through a separate stock exchange filing on Thursday, chairman Hemant Kanoria told investors that in the coming months, Srei expects concrete engagement/progress in the areas of debt realignment plans through a consultative process across different creditor classes, under the auspices of the NCLT or as advised by the commercial banks, and equity raising plans to shore up the capital base in Srei Equipment Finance, the operating company.
“Depending on the recommendation of the transaction advisors and comfort of the creditors, we have the flexibility to optimally choose the corporate structure keeping in mind extant regulatory, tax and legal guidelines,” he added.