SREI Infrastructure

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Investee: SREI Infrastructure

Investor: BNP Paribas

Investment Value: $180 mn

Subhash Mohanti, Vice President, Communications & Brand Development, SREI Infrastructure Finance, comments to 4Ps B&M, “The infrastructure sector in India is growing at a phenomenal pace and will require huge financial resources to maintain the tempo. With the government’s focus increasingly switching to the PPP mode, where more and more funding of projects will have to come from private routes, the obvious need is to increase the avenues of funds, and that too at competitive rates. Our association with BNP Paribas will help us access more funds at relatively cheaper rates, which will not only improve our strike rate in the infrastructure sector, but improve working margins as well. Also, the association will give us access to better systems.”

SREI Infrastructure was formed through a JV with BNP Paribas Lease Group (BPLG), which is a wholly-owned subsidiary of the French bank. The deal envisages a 50:50 partnership in a new JV, whereby BPLG will bring in Rs.775 crore, of which Rs.375 crores will be utilised towards acquisition of a 50% equity in the new JV. The remaining Rs.400 crores will form the value of the businesses that will be transferred from SREI Infrastructure Finance to the new JV. Also, the entire asset finance division of SREI will get transferred to the new company, which will be held jointly by SREI. The new joint venture will merge the existing insurance businesses of SREI, currently operated under SREI Insurance Limited, a wholly owned subsidiary of SREI. The parent SREI will continue to engage in equipment finance. Assets of Rs.15 crores and more will be done by SREI, while those below the Rs.15 crores mark will be done by the new JV with BNP Paribas. This apart, SREI has and will continue its foray strongly in infrastructure project advisory.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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