International Finance Corporation (IFC), a member of the World Bank Group, is weighing a proposal to offer debt funding of up to $100 million to Mumbai-headquartered Tata Motors Finance Ltd, according to a disclosure.
The proposed investment – which comprises senior, secured funding of up to five years – will be used by the non-banking financial company (NBFC) to support small and medium enterprises in Low Income States (LIS) in India to purchase commercial vehicles.
The funding – once approved – will be routed through either the external commercial borrowings route or by subscribing to non-convertible debentures issued by the company, the disclosure further stated.
Tata Motors Finance is one of the pioneers of vehicle financing in India and is engaged in the business of financing the entire range of Tata Motors manufactured commercial vehicles and passenger cars since its inception in 1957.
Tata Motors Finance and Tata Motors Finance Solutions are NBFC subsidiaries of TMF Holdings Limited (TMFHL), which in turn is an investment company owned by Tata Motors Ltd. Tata Motors Finance has a strong footprint across India and operates through its network of over 270 branches, in addition to Tata Motors’ dealer outlets. As on March 31, 2019, its assets under management stood at around Rs 31,800 crore.
According to the current disclosure made by IFC, the company will now match the investment of $100 million with $300 million from other sources of funding to create a total pool of $400 million for financing commercial vehicle purchases by entrepreneurs in LIS.
In India, IFC has so far invested in nearly 400 companies, providing almost $15 billion in financing from its own account and mobilisation from external resources. Per information available on its website, IFC’s committed portfolio in India as of June 2018 stood at $6 billion.