SREI Infrastructure Finance Ltd.

SreiLogo2


Country:

India

Sector:

General Financial

Signing Date:

Sept 2006

Oct 2009

Total Project Cost:

USD 45M

USD 70M

Lender of Record:

FMO

FMO

Cordiant Exposure:

USD 15M

USD 10M


Company Description

SREI was founded in 1989 with the objective of becoming a specialized player in the niche market of construction equipment financing in India. Due to its “early mover” advantage and strong ties with the IFI community, SREI has grown to become the county’s leading construction equipment leasing operator to the private sector. More recently, SREI has leveraged its experience in the leasing sector to expand into the rapidly growing and complimentary project financing market (most of the equipment financed by SREI is used for infrastructure construction). Today, SREI’s core business lines include: (i) construction equipment leasing, (ii) infrastructure project finance and (iii) renewable energy project finance.

SREI is India’s market leader in its sector. SREI is listed on the Mumbai, Kolkata and National Stock Exchanges. In addition, SREI was the first Indian Infrastructure Financing Institution to be listed on the London Stock Exchange (LSE).

Deal Logic

Infrastructure in India remains severely underdeveloped. As a leading private sector infrastructure financing institution, SREI caters to the pent-up financing demand of the infrastructure sector in India.

Investment Rationale

  • Strong Borrower: SREI is a well capitalized company that continues to prudently grow its assets with reasonable profitability and low loan losses.
  • Vast Market Demand: Indian infrastructure is in an appalling state both in terms of the decrepitude of what exists and the very large gap between current supply and demand. Roads, port and airports, urban transport, water supply and wastewater treatment and power all require a massive level of investment to be brought up to reasonable standards, let alone meet the new needs generated by the expected continuing economic growth.
  • Conservative Credit Culture: SREI has comprehensive operating policy and procedures for credit assessment, credit approval, documentation, and credit monitoring and supervision. Transactions undergo a full business analysis and must include an on-site visit.
  • Good Security: The loan benefits from a strong security package.
  • Good Corporate Governance: SREI has a 12 member Board of Directors of which 6 are independent, various management committees (asset/liability, credit, and audit) and a good IT system.
  • Strong Environmental Oversight: SREI has an Environmental Policy which was adopted in August 1999 based on the guidelines and norms set down by its Foreign International Lenders (especially from IFC), and also incorporates the requirements under Indian environmental regulations and rules.