STFC is also open to Indian NBFCs who would want to sell their portfolio. Sridhar added that this could well be the beginning of consolidation in the NBFC segment.
Shriram Transport Finance Company (STFC), which has acquired the assets of GE Transportation Financial Services, a part of GE Capital, is looking aggressively for more such acquisitions, R Sridhar, managing director, said.
Sridhar added that talks of acquiring assets of Citi Financial have not fructified. “We have been negotiating with Citi Financial for a while now, but the company is not up for sale anymore as they want to enter the market again. Nonetheless, there are many multinational NBFCs who are into transport and construction financing that we can acquire as they would make business sense.”
STFC is also open to Indian NBFCs who would want to sell their portfolio.
Sridhar added that this could well be the beginning of consolidation in the NBFC segment.
The other NBFCs competing with STFC are Sundaram Finance, Mahindra Finance, Tata Motors Finance, Magma, Bajaj Finance. The acquisition of GE assets worth Rs 1200 crore was made through internal accruals, taking STFC’s debt to equity ratio to 6:1 from 5:1 prior to the acquisition. “Since we are growing at 25% YoY, we have excellent liquidity condition and our ability to raise money is quite strong,” Sridhar added.
STFC had in August raised Rs 1000 crore via the issue of secured non-convertible debentures. The GE Capital unit acquisition will also get with it a ready customer base of 20,000 customers in around 60 locations, which, according to Sridhar, is 10% of their total network.
By acquiring the world’s largest NBFC, STFC believes that its reputation will be spiked up and help improve its overall profile. STFC has a market share of 78% in new vehicle financing and about 25% in old vehicle financing.
GE Capital will retain the balance portfolio with no change to the existing people and infrastructure supporting that business. “This sale is line with our strategy to exit non-core areas and ensure a sharper focus on our growth businesses,” said Anish Shah, president and chief executive officer, GE Capital India. “We are not planning any reduction in headcount or infrastructure as we will continue servicing the remaining portfolio.”
“”In 2010, we plan to grow several commercial and consumer finance businesses in India, including our credit card joint venture with State Bank of India,” Shah added.
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