CDC Group Plc, the UK government’s development finance institution, has invested Rs 400 crore ($57 million) in Cholamandalam Investment and Finance Company Ltd through 10-year masala bonds.
Masala bonds are bonds issued outside India but denominated in Indian rupees, rather than the local currency.
The non-banking financial company issued its maiden masala bonds or unsecured, subordinated, rupee-denominated bonds to raise Rs 400 crore Tier-II debt from the CDC group.
The bond issue may be listed on London Stock Exchange or any other international stock exchanges in the future, Cholamandalam said in a statement.
In December last year, the financial services firm’s board approved the issuance of equity shares worth Rs 1,000 crore through qualified institutional placement (QIP), in one or more tranches.
In May, the investment arm of World Bank - International Finance Corporation - had led a $222 million (about Rs 1,575 crore) debt investment round in Cholamandalam, marking its third investment in the NBFC.
Incorporated in 1978, Cholamandalam offers vehicle finance constituting 74% of its portfolio, 21% business loans including loan-against-property to MSME sector loans and home loans as on September end 2019. It has more than 1,000 branches across India, with a diversified loan portfolio spanning 1.2 million customers.
The firm caters to small and medium road transport operators for new and used commercial vehicles with over 50% of the portfolio in low-income states.
CDC group and its investments
In India, CDC has committed to more than $1.7 billion to businesses with a historical ticket size of its equity investment in Indian companies ranging from $10 million to as much as $150 million in India Infoline Finance Ltd.
CDC has backed more than 50 private equity and venture capital funds that invest in India since it began focusing on the country in 2004.
With net assets of £5.8 billion (Rs 53,825 crore), CDC supports businesses that can make goods and services more affordable and accessible to the needy people in Africa and Asia.
Last month, the CDC Group invested Rs 215 crore ($30.3 million) in debt in Dr Agarwal’s Health Care Ltd.
In the same month, it also made an equity investment of $36 million (Rs 255.36 crore) in Warburg Pincus-backed logistics firm Ecom Express Pvt. Ltd.
In the logistics segment, CDC had invested $25 million in Pristine Logistics and Infraprojects Pvt. Ltd, which builds and operates rail freight terminals, in 2015. Its overall bet on Pristine is way higher at $200 million, through a combination of equity and debt investment. CDC exited the company in March 2018.