Project lender Ethos aims to deploy $1 bn for lending in India over 5 yrs

US-headquartered project lender Ethos Asset Management has readied plans for lending in India, and aims to deploy more than USD 1 billion in the country over the next five years, a top official has said.

The company typically writes long-term loans which are repaid in about 12 years by the borrowers, and has already deployed over USD 9 billion across many economies in the world including the US, South America and Europe since starting the business in 2012.

Its founder and chief executive Carlos Santos told PTI that India's economic growth potential and young demographics are a draw for the firm to look at India.

He added that of the ten sectors propelling India growth, six sectors, including infrastructure, energy, agribusiness, manufacturing and information technology, are a key focus for his firm.

"We will deploy USD 100 million in the second half of 2023 and deploy USD 200 million in 2024. In 2027, we plan to take it up to USD 350 million," he said, adding that in the next five years, it would deploy over USD 1 billion at a cumulative level.

The firm depends on money raised as rentals by deploying an algorithm which helps increase profits for traders, Santos said, adding that repayments by clients are also deployed back into the business.

The loan it will be doing will come as an external commercial borrowing for an Indian entity, Santos said, adding that he does not expect any regulatory roadblocks for the business. It has hired the services of the law firm Luthra and Luthra, he said.

It asks a borrower to get about a fifth of the loan amount as a security, and pledge the same at an overseas location, which can be invoked if required, Santos said.

At the prevalent interest rates, a loan would typically cost around 5 per cent per annum for clients, he said, pointing out that the firm is comfortable with the level even as interest rates are at an elevated level in its home country.

Typically, it gives a three-year repayment holiday for the initial part, where it offers a full-grace period where the client does not pay any interest or principal as a project comes up.

In the last two years, it has looked at about three potential loan deals but the same could not fructify. However, the lender is more confident with the current set of negotiations it is pursuing.

By December, two deals, one each in the infrastructure and energy space, would have gone into deployment, he said.

The firm does not have a presence in India and will be depending on local partners to take care of diligence, audit and legal requirements, he said.

At present, it has offices in the US, Brazil and the UK, Santos said, adding that if the India business grows, it may have a presence locally as well.