$3-bn fund raising for Tata to be completed by month-end

MUMBAI: A consortium of banks mandated to raise $3 billion to fund Tata Motor's acquisition of Jaguar and Landrover (JLR) is likely to complete the fund-raising by end-May.
    
The consortium, which initially comprised eight mandated lead-arrangers, has received an $ 1-billion commitment from 6-7 banks, while the process is still on for more banks to participate, a source close to the development said here.
    
"The initial syndication comprising eight banks has received a $1-billion commitment from 6-7 banks comprising both, domestic and foreign banks. The syndication is trying to rope in more banks so as to reduce the financial burden on each member," the source said.
    
However, even if the syndication fails to attract more banks, the eight mandated lead-arrangers are understood to have secured permission from their Boards to provide the remaining amount, the source said.
    
The eight mandated lead-arrangers are State Bank of India, Citibank, J P Morgan, Standard Chartered, BNP Paribas, Tokyo Mitsubishi UFJ, Mizuho Financial Group and ING.
    
State Bank officials declined to divulge the names of banks who have committed $1 billion.
    
The syndication had approached a number of banking majors such as Chinese Construction Bank, Industrial Bank of Korea, National Bank of Dubai, HSBC and Singapore-based DBS and United Overseas Bank.
    
The domestic banks which have been approached include ICICI Bank, HDFC Bank, Axis Bank and state-run Bank of Baroda, Bank of India and Indian Bank, the source said.
    
The syndication had sent invitations to over 100 banks to be part of the fund-raising programme, the source said, adding, "only a few number of financiers were qualified to participate in the deal."
    
A major portion of the funding would be mopped up from Asian and UK markets through bridge loans having a maturity of 12-15 months at an interest rate of about 1.10 per cent above Libor, the source said.
    
The members of the consortium will normally receive commissions in the range of 0.25-0.50 per cent of the total deal amount, though the figure may vary according to the period of funding and the amount raised.
    
While the eight mandated lead-arrangers had initially aggreed to contribute around $400 million, the inclusion of more banks is expected to reduce the amount as the responsibility will be shared by more financiers, the source said.
    
Besides funding the $2.3 billion (about Rs 9,200 crore) JLR acquisition, Tata Motors plans to use the amount raised to fund other strategic plans including the roll-out of its Rs 1 lakh car.