Daimler Financial Services expects portfolio to grow to Euro 1.2 bn this year

The company, which is tapping bond market for the first time ever, expects its business to triple in next four years

Daimler Financial Services India (DFSI) is expecting its assets under management (AUM) to grow to Euro 1.2 billion this year, an increase of around Euro 200 million during the rest of this year. The company, for the first time, is also tapping the bond market to raise funds, said senior management official.

DFSI, launched in July 2011 in India with an initial investment of $50 million, has crossed Euro 1 billion portfolio when it completed five years of operations.

Speaking about the company's completion of five years of operations in India, Friedrich Weick, managing director of DFSI said, "We now have Euro 1 billion portfolio, 28,000 plus contracts over a 4.5 years period of actual operations".

"I would like my business portfolio to double or even triple in next four years, by 2020," he added.

The equity of the company has grown from $50 million in the initial stage to around $204 million in five years. The equity investments from the parent company is an ongoing process which takes place every year, said Prasad Salunke, executive vice president, Sales and Marketing-Passenger Cars and a member of Board of Management, DFSI.

The funding for the company for its operations in the country are managed locally, through banks. However, it has tapped the bond market last month and is in the final stage of raising funds from the bond market. The details of the fund raising were not divulged.

"As a financial firm, we want to have alternate source of funding and we found it right time to enter the bond market," said Weick. While there is slight benefit at this point of time, in bond offerings, tapping the bond market is a decision to avoid relying only on one mode of fund raising.

He said that the company is expecting a better economic growth in the country, which would increase the stability of income for the customers, resulting in better growth of its business. The business model, which is to serve this affordable category of customers, has seen a growth from two per cent of its business from the time of its launch to around 15 per cent now.

Almost 99 per cent of its disbursement is to the captive customers of Daimler group companies, a focus which will continue in future. DFSI is financing every second vehicle the group sells in India at present, he said. Almost 85 per cent of its portfolio is from retail customers, while the rest is from the wholesale financing, at present.

Around 70 per cent of its business is from tier-I and II cities, whereas the tier III market and others, which comprises the rest of the market, is also growing.