Shadow lender Cholamandalam Investment and Finance Co. is set to issue India's largest local currency debt sale by a financier, planning to raise 50 billion rupees ($518 million) through a floating-rate bond. This move follows other significant debt issuances by the company in recent months.
In August 2024, Cholamandalam raised 10 billion rupees ($119 million) via a perpetual bond, which was noted as the largest such debt sale by an Indian private financier. This perpetual bond, arranged by Axis Bank Ltd., carries a 9.50% coupon and can be recalled by the issuer after 10 years. This transaction alone boosted the market, which had only seen 890 crore rupees ($106 million) in perpetual bonds sold by non-bank firms that year, a 69% decrease from the previous year.
Before that, in July 2024, the company raised 20 billion rupees ($239 million) by selling seven-year subordinated bonds, also marking the largest offering of its kind by a private shadow lender in India. This issuance, arranged by Axis Bank Ltd., featured a 9.10% coupon and attracted bids of 34.8 billion rupees, nearly double the target amount.
These issuances underscore Cholamandalam's strategy to strengthen its capital base and fund double-digit credit growth. The non-bank firm reported a 22% increase in loans and a 30% jump in profit to 940 crore rupees ($112 million) in the June quarter. The floating-rate bond issuance will further aid its expansion, particularly in vehicle finance and small business loans, and aligns with the company's efforts to tap diverse funding sources.
