- Date written
- September, 2024
- Contact for guarantco
- Alison Hicks
- Communications Consultant
- +44 (0)738 5551967
- alison.hicks@guarantco.com
- Contact for PIDG
- Cecilie Sorhus
- Chief of Staff and Head of Communications
- +44 (0)7917 302724
- cecilie.sorhus@pidg.org
- Share
GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided an INR 1 billion (c. USD 12 million equivalent) guarantee to Axis Bank, one of the largest private sector banks in India, for a loan to Muthoot Capital, one of India’s fastest growing non-banking financial companies. The GuarantCo guarantee will cover up to 65 percent of the Axis Bank loan. The proceeds will be used by Muthoot Capital to on-lend to customers in rural and non-metro areas in India for purchasing electric two wheelers.
The guarantee is provided under the USD 200 million (INR equivalent) electric vehicle (EV) framework guarantee agreement signed by GuarantCo and Axis Bank allowing mobilisation of funds between USD 300 and 400 million (INR equivalent) to finance the e-mobility ecosystem in India. It was first announced under a Memorandum of Understanding during COP26 in Glasgow in November 2021 after which a framework agreement was signed in May 2022.
This is GuarantCo’s third transaction under the Axis Bank EV framework agreement which has first enabled an INR 2.5 billion (c. USD 30 million) loan to Vivriti Capital to support the company’s strategy to expand its portfolio through lending to companies operating in the e-mobility ecosystem in India. Secondly, the framework has enabled Axis to issue an INR 1 billion (c. USD 12 million) loan to Everest Fleet for the purchase of electric cars to be deployed as low emitting taxis in India, both in December 2023.
The project focuses specifically on providing transport solutions to rural and non-metro areas that predominantly consist of lower income populations and have historically been underserved by services. The transaction is expected to benefit Indian companies operating within the EV ecosystem with over INR 0.8 billion (c. USD 10 million) expected to be paid to local businesses in the supply chain such as equipment manufacturers, vehicle dealers and insurers.
The INR 1 billion EV transaction will increase electric two-wheeler vehicle provision, contributing to SDG 9.4 (Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies) and SDG 11.2 (Provide access to safe, affordable, accessible and sustainable transport systems for all).
Surabhi Mathur Visser, Chief Investment Officer at GuarantCo, said:
“We are delighted to have closed the transaction with Muthoot Capital under the electric vehicle framework guarantee agreement that we signed with Axis Bank in May 2022. This is the third transaction that we have closed under the agreement which after the ones that we closed with Vivriti Capital and Everest Fleet now total INR 4.5 billion (c. USD 54 million). This is also the first transaction under the framework which will cover the demand side of the EV sector through the provision of credit so that customers can purchase electric vehicles. In addition, the transaction is expected to have a market transformation effect that will help catalyse deployment of more electric vehicles in India. GuarantCo, through the Private Infrastructure Development Group, will continue to utilise the climate mitigation guarantee with Axis Bank to further the e-mobility ecosystem in India and to deliver against our climate action goals in alignment with the PIDG 2030 strategy.”
Rajiv Anand, Deputy Managing Director at Axis Bank said:
“Axis Bank stands committed to support and accelerate the growth of e-mobility industry in India. As one of the leading banks in the country, we are dedicated to driving initiatives that create positive environmental and social impact. By promoting the adoption of electric vehicles, we are working to reduce emissions, enhance air quality and provide affordable and accessible transport solutions nationwide. We have proactively scaled up our partnerships and engagements with EV dealers, manufacturers, and other players and will continue to do so. This collaboration not only supports the development of green infrastructure in India but also aligns with our broader vision of fostering an inclusive future where sustainable practices benefit all segments of society.”
Mathews Markose, Chief Executive Officer at Muthoot Capital said:
“Partnering with GuarantCo marks a significant step forward in accelerating the adoption of electric vehicles and advancing sustainable transport solutions in our country especially in the rural and semi-urban markets. This funding will enable Muthoot Capital to provide innovative and tailor-made financing options aimed at making electric vehicles more accessible and affordable to a wide range of consumers and businesses. We look forward to enabling the common man to own their own two-wheeler ensuring affordability and convenience. This will lend wings to our slated objective of growing our EV by 200 crores during FY25.”