Shriram Transport buys GE Caps' 2 loan portfolios

Asset financier Shriram Transport Finance bought the commercial vehicles and construction equipment portfolios of two GE Capital units for about Rs 1,100 crore, the company said in a statement today.

“The commercial vehicle portfolio is worth Rs 1,000 crore, and the rest being construction equipment portfolio,” said R Shridhar, managing director of Shriram Transport Finance.

GE Capital would retain the balance portfolio with no change in personnel and infrastructure supporting that business, the company said in a statement.

“This sale is line with our strategy to exit non-core areas and ensure a sharper focus on our growth businesses,” said Anish Shah, president & chief executive officer (CEO), GE Capital India. “We are not planning any reduction in headcount or infrastructure, as we will continue servicing the remaining portfolio.”

 

“In 2010, we plan to grow our commercial and consumer finance businesses in India, including our credit card joint venture with State Bank of India,” Shah added. Shriram Transport Finance is primarily a financier of used vehicles, but the loans purchased from GE Capital are for new vehicles.

The company has recently ventured into construction equipment finance and is in the process of appointing a CEO for Shriram Equipment Finance.

According to Shridhar, the current size of the company’s construction equipment portfolio is Rs 2,000-2,500 crore.

Earlier this year, Shriram Transport Finance had signed a memorandum of understanding with GE Transportation Financial Services, a unit of GE Capital, to form a joint venture (JV) to finance purchase of equipment of any kind, such as construction, medical or industrial. However, the JV failed to take off due to capital constraints faced by GE Capital.

Shriram Transport Finance has Rs 25,824 crore of assets under management (AUM).

“The business is growing at a good pace with commercial vehicles sales picking up. We expect our total AUM to grow by 25 per cent this year,” said Shridhar.