42444 - TMFL SME Financing

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Summary of Investment Information

Project Number

42444

Company Name

Tata Motors Finance Limited

Date SPI Disclosed

Apr 26, 2019

Country

India

Region

South Asia

Projected Board Date

May 31, 2019

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jan 11, 2025

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 5, 2019
Signed : Nov 18, 2019
Invested : Nov 25, 2019

Sector

Other Non-Banking Financial Institution (NBFI)

Project Description

The proposed investment comprises a (up to 5-year) senior, secured funding of up to US$100 million to Tata Motors Finance Limited (“TMFL” or the “Company”). IFC’s investment will be used to support purchase of Commercial Vehicles (CVs) by Small and Medium Enterprises (SMEs) in Low Income States (LIS) of India. The Company will match IFC’s investment of US$100 million with US$300 million from its other sources of funding to create a US$400 million pool for financing CV purchases by SMEs in LIS.

TMFL is engaged in the business of financing entire range of Tata Motors manufactured commercial vehicles, and passenger cars. TMFL has a presence over 270 branches spread across India to cater the needs of its customers. TMFL is the largest financier of Tata Motors vehicles and also offers customized product offerings to Tata Motor’s end customers.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	100.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to SME Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Stakeholders impact: The project will provide an additional US$400 million of direct on-lending to SMEs in LIS of India, a segment that is currently under-served in India. It would also support formal job creation by contributing to improvement in economic activity. Market Impact: The project is a part of a series of counter-cyclical interventions IFC is undertaking in the NBFC sector in India with leading institutions to support the market by increasing funding to select NBFCs to strengthen their balance sheets so that they can provide finance access to underserved borrowers. The proposed investment will focus on CV financing in the LIS and thereby, support inclusive growth.

Financial Additionality: IFC is providing financial additionality through the provision of longer tenor funding that is currently of limited availability to NBFCs in the market. The longer-term financing will financially strengthen the systemically important NBFC, and diversify its funding sources Trusted Partnerships: IFC's investment will signal continued confidence in the Company's business model and encourage other institutional investors to invest in the Company.

E&S Category Rationale / Risks and Mitigation

The company is primarily involved in financing of commercial and passenger vehicles to individuals and small road transport operators and fleets of corporate entities. The company is not primarily engaged in providing working capital or business loans to the borrowers. IFC's loan will be utilized for commercial vehicle finance only and will not be used for working capital or business loan to the borrowers. IFC funds will also not be used to support any higher risk business activities that may include significant risks or impacts on the environment, community health and safety, biodiversity, cultural heritage, involuntary resettlement or risk of adverse impacts on Indigenous Peoples or significant occupational health and safety risks. Hence, the E&S risk of the proposed investment is low, and the project is categorized as FI-3. The applicable Performance requirements will include the IFC- FI Exclusion List. The client's HR policies and practices are in line with IFC PS-2 requirements.

Contacts

For Inquiries About the Project, Contact

Tata Motors Finance Limited
Amit Mittal
Head-Treasury
61729699
tmfgrouptreasury@tmf.co.in
10th Floor, 106 A&B, Maker Chamber III, Nariman Point, Mumbai 400021
http://tmf.co.in

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