Shriram Transport Finance Company Ltd (STFC)'s new equipment finance subsidiary will commence operations from September 1 this year with an initial capital of Rs 50 crore, according to R Sridhar, managing director, STFC.
Speaking to Business Standard on the sidelines of the company's 31st AGM here on Wednesday, he said the new company, christened Shriram Equipment Finance Company, would be listed and partners, including private equity investors, would come on board but did not specify any timeframe for the process.
STFC's assets under management (AUM) currently is around Rs 30,000 crore, of which 7-8 per cent is contributed by the company's equipment finance division.
Sridhar said, “We see good potential in this space, and to tap the market we decided to focus on a big scale towards which a new company has been floated.” According to market sources, the new-equipment finance segment alone is estimated to be around Rs 10,000 crore.
The new company would focus on financing new as well as used equipment, Sridhar said, adding that their target customers would be from middle and lower segments, who are typically small-time contractors. “Our target for the new company is Rs 6,000 crore AUM by the end of March 2013,” he said.
Initial capital of Rs 50 crore will be infused by STFC and the company plans to raise money through debt for both lending and capital requirements. “We will also list the company and would rope in partners, which could be private equity,” he said, but did not specify any timeframe.
He noted that GE had earlier shown interest in taking 20 per cent stake in the new firm but due to financial crisis they pulled out.