Shriram I

India

Transportation Transportation

INR 900 million partial credit guarantee of the mezzanine trance of a truck finance receivables securitisation in India.

Financing partners
Deutsche Bank, FMO

GuarantCo guarantee
INR 900 million (USD 18.3 million)

Total transaction amount
INR 21 billion (USD 420 million)

Transaction benefits

Deutsche were seeking to syndicate an INR 2,036 million mezzanine tranche in a securitisation of truck finance receivables but were struggling as there was no investor appetite for mezzanine debt in India. GuarantCo, in collaboration with FMO, was able to guarantee the mezzanine tranche thereby enabling the successful securitisation.

GuarantCo and FMO’s facility helped demonstrate the commercial viability of mezzanine guarantees in the nascent Indian securitisation market and today Shriram is able to get such guarantees from private sector banks. GuarantCo and FMO’s intervention helped this transition to more sophisticated financial products thus building additional capacity in the local capital markets.

Development benefits

Shriram finances small truck owner-operators who would otherwise have to borrow from unlicensed money lenders. The finance enables thousands of low-income truck drivers to purchase their own vehicles rather than remaining employees. The mezzanine guarantee was a product not available from Indian investors. This intervention enabled a much larger capital markets transaction to be completed without which Shriram would have reduced its support to the sector.

The Shriram group is one of the corporate leaders in HIV awareness and reduction programmes. The Shriram Transport business is essential to the programmes, as the company has unrivalled access to truck drivers to run health and education programmes.