Global institutional investors show interest in Srei Equipment Finance

Srei Equipment Finance (SEFL) has received an expression of interest from international investors for a proposed capital infusion, the company said on Tuesday.

“SEFL has been continuously exploring opportunities to strengthen its capital base. The expression of interest from renowned global institutional investors reflects the confidence that international investors have on Srei's business. The company will be working towards resolving matters with the creditors at the earliest,” the company said.

The capital infusion in the form of equity will be in tranches. Earlier in March, Care Ratings downgraded Srei group’s debt totalling Rs 29,240.30 crore to “default”, making debt raising difficult.

At its board meeting held on Tuesday, SEFL constituted a strategic coordination committee (SCC) comprising independent directors to raise fresh capital from strategic or private equity investors. The SCC will coordinate, negotiate and conclude discussions with potential strategic and/or private equity investors to raise fresh capital for the business in consultation with the management.

The committee will take forward the expressions of interest received from international investors and will also initiate discussions with other potential suitors who have been in touch with the company over the last year in consultation with the management, the company said. The committee will be assisted by advisors and investment bankers who will be working closely with the members.

The SCC will be chaired by Malay Mukherjee, independent director and the other committee members will be independent directors, Suresh Kumar Jain, Tamali Sen Gupta, Uma Shankar Paliwal and Shyamalendu Chatterjee with invitees having relevant domain knowledge. 

Mukherjee has over 41 years of experience in banking and NBFCs including venture funding, factoring and broking; he was the chief executive officer and managing director of IFCI Limited. 

The SCC will be the nodal point for a comprehensive cash flow realignment plan with banks and financial institutions and for all external service providers, including investment bankers, lawyers and consultants.

Srei has been in the spotlight for a while now as Covid-induced stress led to an asset-liability mismatch. In the third quarter, Srei Infrastructure reported a consolidated net loss of Rs 3,810.93 crore on account of higher and accelerated provisioning, which came on the back of a special audit conducted by the Reserve Bank of India (RBI) into the company and SEFL.

The company has also seen about 200 exits across various levels since December last year as banks capped salaries at Rs 50 lakh a year for senior executives.