Exim Bank cashes in on funding foreign buyouts

Financing Indian companies' overseas acquisitions is turning a major business for the Export-Import Bank of India (Exim).

S Sridhar, executive director, Exim Bank, said, "The bank is looking forward to providing Rs 750-800 crore finance to Indian companies looking for overseas acquisitions. Last year, the bank financed 12 acquisitions worth Rs 550 crore."

In the first six months, the bank has already financed Rs 350 crore towards acquisitions abroad, he said.

Among the major deals, was the $150-million acquisition by Crompton Greaves in Belgium early this year, of which Exim Bank financed $35 million, he said.

The bank is also ready to finance domestic acquisitions of export-oriented units, Sridhar said.

The bank's agri-business touched Rs 700 crore till now and is poised to register 25 per cent growth by the end of the year, he informed.

The bank today signed a memorandum of cooperation (MoC) with United Bank of India for a collaboration between the two banks for exchange of information on trade, business, investment, legal opinion.

Exim Bank is also in discussion with two more banks for similar cooperation, Sridhar said.

"Exim Bank has expertise in niche areas, but given our limited size, we would like to partner with Indian banks, particularly the ones with overseas branches in strategic locations in terms of trade and commerce," he said.

Last year, the bank extended Rs 11,500 crore of funded and Rs 2,000 crore of non-funded facilities for overseas industrial turnkey projects, civil construction contracts, supplies as well as technical and consultancy service contracts.

The bank is poised to register a 25 per cent growth in the funded facility segment and 25-30 per cent growth in the non-funded facility in 2005-06, Sridhar said.

Till now, the bank has extended 53 lines of credit (LoC) worth $1.26 billion and is negotiating LoC worth $1 billion, he informed. The bank is looking forward to bringing in trade-financing instruments into the Indian market.