Ge Capital Steps Into Another Financial Arena

GE Capital has entered into one more segment of the financial sector commercial vehicle and working capital financing following the acquisition of a majority stake in SRF Finance.

GE Capital is already present in the consumer finance market through Countrywide Consumer Financial Services (CCFS) and in passenger car financing through Maruti Countrywide Auto Financial Services (MCW). CCFS finances non Maruti cars. CCFS is a 50:50 joint venture of Housing Development Finance Corporation and GE Capital (I) Ltd and MCW is held by Maruti Udyog, HDFC and GE Caps (I) Ltd.

GE Caps (I) is into mid market financing through portfolio buyouts and GE Caps of US now has entered the area of commercial vehicle finance by acquiring SRF Finance. Players in the auto finance industry stated that the company will acquire a major share in this market backed with GEs funds. SRF Finance on the other hand is expected to concentrate its activities in the areas of nylon tyre cord and chemicals.

SRF Finance has an established branch network and asset base that will become an integral part of GE Capitals commercial finance business in India. Currently SRF Finance is an active player in the car and truck financing business. The car finance business of SRF now clashes with the car finance business of CCFS and MCW. Apart from commercial vehicle financing with the acquisition of SRF Finance GE Capital will also be expanding its presence in working capital financing. SRF Finance is active currently in asset financing, trade financing, investment banking, money market operations, deposit mobilisation and stockbroking.

GE acquisitions of the equity will also help SRF Finance to reduce the debt burden and strengthen other businesses such as opthalmic lenses and polyester films. A Bharat Ram vice chairman and Senior Managing director stated that the ``company intends to raise further equity by way of rights issue and private placement with FIIs and strategic investors.

Currently GE Capital India is active in consumer finance, commercial finance, Project and structured finance, capital market and billings and services. Additional areas of business which it has been keen on entering include operating leases also. Since, SRF Finance is already active in leasing, the acquisition would help GE further its plans of entering the operating lease business.

In commercial finance GE commenced operations to provide equipment financing, leasing and hire purchase, term loans as well as short term financing products for a broad cross-section of Indian industry, including the medium to small scale segment.