Srei plans to have a co-lending arrangement with about eight banks initially.
“We have aligned our business model in consonance with the on-going infrastructure projects in the country and structuring more transactions through co-lending arrangements with banks. In view of the co-financing, our risk weighted returns will improve and will augment our profits,” said Kanoria.
Apart from co-financing, Srei equipment also lends by way of securitization, apart from direct lending, where it has the entire loan exposure in its books.
As on December 2018, Srei’s total asset under management was about Rs 50000 crore. Of this, the share of equipment finance was about 32000 crore, while infrastructure finance was nearly Rs18000 crore.
At present, Srei has about 35 per cent share in the equipment finance market in India. It has been growing its equipment finance book, while remaining cautious on infrastructure lending. For example, as on December 2017, Srei’s exposure to equipment finance was about Rs 27000 crore, which increased to Rs 32000 crore by the end of December 2018. However, the share of infrastructure finance remained at the same level of Rs 18000 crore in both the years.
“We will continue to focus on our equipment financing business because the opportunity in the business is substantially large. Many infrastructure players like IDFC and many banks have exited the infrastructure financing space in the recent past. Though we had also slowed down our disbursements in the infrastructure projects for the last six years, but we feel that going forward, after the new government comes in, it will take off again. However, our equipment financing business is growing and will continue to grow,” said Kanoria.
In January this year, Srei Infrastructure Finance had announced listing its subsidiary Srei Equipment Finance through an amalgamation scheme. Earlier, it had planned to list Srei Equipment finance through an initial public offering.
Under the amalgamation scheme, the lease business of Srei Equipment will demerged to new company, a wholly owned subsidiary of Srei Infrastructure Finance. The remaining portfolio of the equipment finance company will be amalgamated with Srei Infrastructure Finance. Thus, Srei Equipment Finance would stand dissolved, without being wound up.