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Murugappa Group’s NBFC, Cholamandalam Investment and Finance Company, has raised ₹400 crore from CDC Group, a UK-based government-owned development finance institution, through the issuance of unsecured, subordinated, rupee-denominated masala bonds.
This is Cholamandalam’s maiden masala bond issue, which may be listed on the London Stock Exchange or any other international exchange in the future, according to a statement.
“CDC and CIFCL have joined hands to address the business credit requirements of small and medium road transport operators and MSME customers,” said Arun Alagappan, Managing Director of Cholamandalam Finance.
CDC’s investment in Cholamandalam’s masala bonds will support the extension of loans to driver-turned-owners and micro and small enterprises in the underserved rural and semi-urban areas of India, he said. Cholamandalam caters to small and medium road transport operators for new and used commercial vehicles, with over 50 per cent of the portfolio in low-income States. A majority of Cholamandalam’s customer segment is self-employed borrowers/entrepreneurs and small manufacturers, with nearly one-third of the portfolio constituting first-time borrowers.
“Our investment will enable Cholamandalam to extend loans to small vehicle owners and facilitate the availability of credit to rural and semi-urban markets and support the company with subordinated-debt in this tight liquidity environment,” said Srini Nagarajan, CDC’s Managing Director and Head of Asia.
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