Srei Infrastructure Finance Limited recently announced its decision to augment the capital of its infrastructure finance and equipment finance businesses. This will help the businesses in maintaining and strengthening their leadership positions. The move will result in listing of the company’s equipment finance business through a composite scheme of arrangement and amalgamation. The decision has been vetted and approved by the company’s board of directors.
The recent decision will help Srei Infrastructure as it will allow shareholders to directly hold shares of both Srei Infrastructure and the newly listed equipment finance business. It will also allow for their direct participation in the equipment finance sector. It will entail an increase in the net shareholder’s fund and will create a corpus of monetisable asset in the form of listed shares of the newly formed equipment finance business and this move will ensure its direct access to public markets. Additionally, it will give an enhanced ability to tap growth capital efficiently and attract investors looking solely to invest in equipment finance business.
Commenting on the development, Hemant Kanoria, Chairman and Managing Director, Srei, said, “In our journey of three decades, we have been creating significant value for our shareholders. This decision will lead to substantial increase in net shareholders’ fund and allow shareholders of Srei to directly hold shares of both infrastructure finance and equipment finance businesses. The move is value accretive for our shareholders as they will have monetisable assets in the form of listed shares of both the businesses. The proposed capital augmentation scheme is expected to further infuse around Rs. 500 crore in our equipment finance business and will pave the way for multifold growth in its revenue and profit. Global and domestic investors will also be able to take advantage of the opportunities in the high growth equipment finance sector by directly investing in our equipment finance business.”
The growth in the infrastructure space, propelled by the government’s substantial budgetary allocations for road, irrigation, mining, railways, ports, affordable housing and other infrastructure sub-sectors has improved the growth prospects of infrastructure finance and equipment finance businesses. In the last few years, there has been significant growth in the sale of construction, mining, and allied equipment and that rationalises this decision.