Srei Infra Finance's board okays fundraising of up to Rs 2,500 crore

NEW DELHI: Srei Infrastructure Finance on Thursday said its board has approved a resolution to raise up to Rs 2,500 crore through various means, including qualified institutional placement. The company is planning to raise capital by way of one or more instruments - through public offer, qualified institutional placement (QIP), private placement, preferential issue or rights issue of shares.

"The board of directors in...meeting today passed a resolution to raise up to Rs 2,500 crore," Srei Infrastructure Finance said in a statement on Thursday.

Earlier to this, its subsidiary Srei Equipment Finance Ltd (SEFL) attracted a total investment proposal of Rs 4,200 crore from the US- and Singapore-based investors.

While Singapore-based Makara Capital Partners has offered a term sheet for an investment of Rs 2,200 crore by way of infusion of capital into the company, US-based Arena Investors LP has evinced Rs 2,000 crore of investment into SEFL.

The company's strategic coordination committee (SCC), led by independent directors, is currently evaluating these proposals and taking necessary steps, said the statement.

Besides, the equipment financier has also received expressions of interest from several other global private investors such as Cerberus Global Investments, Charlestown Capital Advisors, CarVal Investors, Varde Partners Asia Pte and Maystone Capital.

With infrastructure activities significantly slowing down, and claims and arbitration awards getting delayed, the cash flows of Srei's borrowers have been affected, which has resulted in a debilitating situation for all, Srei Infra said.

This has also created a mismatch in Srei's cash flows for the first time in 32 years as it has been supporting its customers, it said.

The pandemic-driven situation has also led to mass-level exits, across all levels, from the company since December 2020.

Nearly 250 employees of the company are learnt to have left the company so far, mainly because the lenders' consortium to Srei has taken control of the cash flows of the company.

They had also put a salary cap at a maximum of Rs 50 lakh, which has been lifted now.

However, clearance of arrears of those senior-level executives whose salaries were curtailed is still due, which may prompt further high-level exits from the company, a person privy to the development said.

Besides, the regular salaries are also delayed or come with a lag, which is causing concern among the employees, the person cited above said.

Srei Infra also urged the government and regulators to understand the specific problems of the players engaged in the infrastructure sector.

"If the financiers' and their borrowers' problems are not resolved, it may result in wiping out many companies which will later lead to higher cost for infrastructure creation as only few players will remain," the company added.

It also said it has been working closely with its clients for resolution and recovery but it will take time and patience to resolve the problems.

"However, since most of Srei's loans are backed with assets and cash flows, Srei remains confident of making significant recovery once the macroeconomic situation stabilises," it added.

Besides, Srei announced to bring in RBI's former executive director Deepali Pant Joshi as an independent director on its board.

With the pandemic still looming large and affecting lives and livelihoods, Srei has made consolidated provisions of Rs 5,513 crore during the year ended March 31, 2021, the company said.

The provisioning has impacted the company's profitability, it said adding there has been a consolidated net loss of Rs 7,338.39 crore in 2020-21.

The company's consolidated total income in 2020-21 stood at Rs 3,487.54 crore, and the assets under management were Rs 39,498 crore as on March 31, 2021.

Srei Infra's shares on Thursday closed 5 per cent down at Rs 13.53 apiece on the BSE.