SREI Infrastructure Finance announces JV with BNP Paribas

SREI Infrastructure Finance Ltd has informed that the Joint Venture ("JV") between SREI Infrastructure Finance Ltd ("SREI") and BNP Paribas Lease Group which was announced last year, will start operations as of April 03, 2008. SREI, one of the leading equipment finance Companies in India, specialized in the infrastructure sector, had entered with BNP Paribas Lease Group, a 100% BNP Paribas subsidiary focused on equipment financing — related services, into an agreement wherein the asset finance division of SREI is brought into a newly formed JV. The operation has been made through a reserved capital increase for BNP Paribas Lease Group towards its acquisition of a 50% stake in the JV whilst SREI remains holder of the remaining 50% of the equity capital.

BNP Paribas Lease Group brings to the JV its specialized equipment finance skills, its international experience combined with the global strength of BNP Paribas. The JV will also benefit from the significant brand value that SREI has already created in the Indian infrastructure equipment sector.

SREI is already the largest player in the financing of infrastructure equipment in India and the partnership with BNP Paribas Lease Group is aimed at increasing further the leadership of the business in its core market whilst expanding the product line further into financing of agriculture, information technology and medical and other equipment. Furthermore, this partnership is also expected to result in a reduction in the cost of funding the operations.

The JV has received all necessary legal and statutory clearances.

Speaking on this occasion, Hemant Kanoria, Vice Chairman & Managing Director of SREI, said "This joint venture between BNP Paribas, one of the largest global banking institutions, and SREI will result in strengthening one of the strong equipment financing institutions which would immensely benefit all stakeholders. In SREI's journey towards being the largest infrastructure financial institution with all financial products and services, it is an important milestone. With this, our asset base as a group will multiply into billions of dollars."

SREI launches Shariat compliant instrument

SREI Infrastructure Finance Ltd has informed that the Company has introduced yet another innovative financial instrument in the Indian market.

The Company's ever growing appetite to always come out with new structures and instruments recently took it to the Gulf which culminated in the launch of the first Shariat compliant instrument, a USD 50 million facility arranged and book run by HSBC.

Although the facility is complex and involves extensive structuring, the syndication has received overwhelming response from investors in Asia and Middle East enabling the Company to expand its investor base. A landmark transaction, this provides a good opportunity for these investors to book exposure in the booming infrastructure sector in India which needs investments of over USD 592 billion over the next 5 years.

"This is the first time that any non-banking financial Company in India has tapped the Islamic funding market," Hemant Kanoria, vice chairman and managing director of the Company said. "This has certainly broadened the scope to access larger doses of international funding for our manifold foray into international infrastructure development markets," he added.

The Company, one of the largest infrastructure equipment finance and infrastructure project finance Company in the country, has over the years been credited with introducing new concepts in mobilization of funds as well as structuring them innovatively to suit customer needs in the infrastructure sector.

Years ago, the Company brought in the concept of mezzanine capital in the NBFC sector, a hybrid financial instrument which sensationalized the financial markets in the late nineties.

Thereafter, the Company was the first to mobilize syndicated loans in the NBFC sector in the country. It was also the first NBFC to hit the global financial markets with a GDR issue and secure a listing on the London Stock Exchange (LSE).

The Shariat compliant fund is a financial vehicle that is a departure from the conventional model of borrowing and lending in the investment banking community. Though, the fund size is USD 50 million, it is eminently scalable based on its performance.

The model holds immense potential to tap vast reservoirs of funds of non-conventional funding available in the different markets of Asia and the Gulf countries and could clearly play a significant role in affording a quantum jump in the SREIs asset base in the near future, Mr. Kanoria concluded.

SREI Infrastructure Finance

SREI Infrastructure Finance Ltd has announced that the board of directors of the Company has proposed a preferential issue of up to 250,00,000 warrants to the Promoter Group, which on conversion, will increase their holding to over 35 per cent from the existing level of 20 per cent.

The board, which met on September 19, 2007 to deliberate on the issue, has convened an extraordinary general meeting of the Company's shareholders on October 15, 2007 to seek their approval.

The warrants, convertible into equity shares in one or more tranches, over a period of eighteen months, are proposed to be issued to the Promoter Group at a price of Rs 100 per share. This is higher than the price calculated in accordance with the Sebi guidelines for preferential issues at Rs 97.10 per share.
Shortly after the board meeting, Mr. Hemant Kanoria, Vice Chairman and Managing Director of the Company said, "This will help augment promoter's holding that had got diluted due to the GDR issue in April 2005." The Promoter Group is investing in the convertible warrants at the market-related prices, which endorses it's commitment to grow the Company aggressively, Mr. Kanoria said.

Steadfastly focused on infrastructure sector of the country, the enhancement in the capital of the Company, will also help the Company to grow its businesses substantially.

Mr. Kanoria said that the infrastructure financing sector in India is poised for an exponential growth in the next five years. In keeping with the growing opportunities, it was imperative, for the Company to strengthen its financial position as well as increase its net worth, he said.

The Company has in the recent times exhibited its strong commitment to the infrastructure sector. One of the biggest players in the infrastructure equipment financing space, the Company has notched up an asset size of more than Rs 6,000 crore already. To increase its market presence and also expand its service base, the Company has entered into a 50:50 joint venture with BNP Paribas Lease Group, a wholly-owned subsidiary of the globally reputed BNP Paribas.