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Srei Infra to transfer lending business to subsidiary

FE Bureau
Srei, Srei Infrastructure Finance, initial public offering, Srei Equipment Finance, market

Preparing Srei Equipment Finance to get converted into a bank, the board of directors of Srei Infrastructure Finance on Thursday approved transfer of its lending business into the former, a wholly owned subsidiary of the latter.

The proposed step will facilitate the lending entity, Srei Equipment Finance, to attract strategic investors and also prepare the entity for a conversion into a bank, as and when the Reserve Bank of India (RBI) decides to allow the conversion, Srei Infrastructure Finance said in a stock exchange filing.

"The revised corporate structures will now enable the companies and their management to focus on specific areas of their expertise," it added. The company informed that, with the developing market conditions in the country's NBFC sector, the boards and the managements of both Srei Infrastructure Finance and Srei Equipment Finance took the decision on the revised corporate structures after several discussions and deliberations with market experts, consultants and the government.

"Board of directors of both the companies at a meeting here today (Thursday) has decided to consolidate the lending business of Srei (Infrastructure Finance) and Srei Equipment into one entity since the focus for last four years has been on growing equipment financing and reducing the infrastructure loan portfolio. The board of directors has decided to consolidate the lending portfolio in Srei Equipment as the infrastructure loan portfolio stands reduced," according to a statement issued by Srei.

Srei Equipment Finance is an industry leader in construction and mining equipment financing. The transfer of lending business, interest earning business and lease business, together with associated employees, assets and liabilities, of Srei Infrastructure into the equipment financing arm is proposed as a going concern basis by way of slump exchange, for a lump sum consideration, without values being assigned to the individual assets and liabilities. This proposed transfer is expected to be completed by September, 2019.

Srei Equipment managing director Devendra Kumar Vyas said, "This consolidation would have far reaching benefits for our equipment finance business. This would also help us leverage our customer relationships better and also focus our resource for maximum economies of scale. This enhanced focus in our equipment financing business would facilitate in maintaining our dominance in the sector."