IIFL Finance Plans to Raise Up to $750 Million via ECBs and Dollar Bonds
Fairfax-backed IIFL Finance is set to secure between $500 million and $750 million (₹4,547-6,820 crore) through external commercial borrowings (ECBs) and dollar bonds in March 2023. This initiative is crucial for the company’s strategy to diversify its funding sources and foster sustainable growth.
Key Details of IIFL Finance’s Fundraising Efforts
– Objective: The primary aim is to broaden the resource base and enhance financial stability, thus reducing reliance on traditional banking channels for funding.
– Current Discussions: IIFL Finance is in talks with existing investors and banking institutions in Singapore and Taiwan to facilitate this fundraising.
– Timeline: Managing Director Nirmal Jain has indicated that the funding exercise is expected to conclude by the third week of March.
The Rationale Behind External Commercial Borrowings
– Diversification: By tapping into ECBs and dollar bonds, IIFL Finance aims to diversify its funding blueprint. This move is aligned with industry trends, as companies increasingly seek flexible financing options.
– Market Conditions: Recent adjustments by the Reserve Bank of India have increased the limits for external borrowings and relaxed related regulations. Eligible firms can now raise up to $1 billion based on their audited balances.
– Investor Interest: Jain highlighted keen interest from global banks and investors, such as Deutsche Bank and Mizuho Bank, which were involved in IIFL Finance’s previous international debt offerings.
Market Insights
– Record Fundraising: The Indian market saw an impressive record of $61 billion raised via ECBs in FY25, up from $48 billion in FY24, indicating robust demand for international financing.
– Bond Issuance Growth: Beyond ECBs, IIFL Finance is also aiming to increase the portion of bond issuance in its liability portfolio. The firm recently initiated a ₹2,000 crore retail bond issue and is pursuing an additional ₹1,000 crore through private placements.
In conclusion, IIFL Finance’s strategic move to raise up to $750 million via ECBs and dollar bonds reflects its commitment to diversifying its funding resources and supporting long-term business growth. By leveraging favorable market conditions and investor interest, IIFL positions itself favorably for a robust financial future.