Massive $500m bond deal: Shriram Finance secures historic social bonds in record-breaking move

Shriram Finance Limited (SFL), one of India’s largest non-banking finance companies, has made a significant stride in the global financial markets by successfully raising $500 million through the issuance of social bonds. These bonds, which are fixed-rate senior secured notes, were issued under the company’s $3.5 billion Global Medium Term Note Programme. The bonds were priced with a 6.15% interest rate and have a 3.5-year tenure. This marks the company’s largest bond issuance to date, underscoring its robust presence in the international financial scene. SFL has made it clear that the proceeds from the bonds will be dedicated to employment generation, with a specific focus on micro, small, and medium enterprises (MSMEs) across India.

According to the company, the issuance received a resounding response from global investors, with an order book exceeding 2.4 times the issue size. Over 125 investors participated, with notable representation from regions such as Asia Pacific (47%), Europe, the Middle East, and Africa (27%), and the United States (26%). SFL’s ability to tighten its pricing by 35 basis points in such a competitive market showcases its financial credibility and strong investor confidence. With 83% of the investment coming from asset and fund managers, the deal highlights the global appetite for investments tied to social and sustainable development.

SFL’s Social Finance Framework Supports Sustainable Development

The success of this bond issuance is rooted in SFL’s Social Finance Framework, which aligns with the International Capital Market Association’s (ICMA) Social Bond Principles. The framework focuses on channeling resources toward employment generation through MSME financing, especially for marginalized and underserved populations. The company also secured second-party opinions from S&P and CareEdge, confirming that its financing aligns with the United Nations’ Sustainable Development Goals, particularly those addressing poverty reduction, economic growth, infrastructure innovation, and inequality reduction.

SFL has emphasized that these funds will primarily support first-time borrowers and small road transport operators (SRTOs), as well as MSMEs, which have historically struggled to gain access to traditional financing channels. The company also aims to provide affordable personal loans, gold loans, and other financial products to individuals in underserved communities, including women. By focusing on such a target population, SFL positions itself as a key player in promoting financial inclusion and economic equality in India.

Expert Opinion on the Deal

Umesh Revankar, Executive Vice Chairman of Shriram Finance Limited, shared his thoughts on the significance of this bond issuance, stating that the overwhelming response from global investors reinforces SFL’s commitment to advancing social finance initiatives. He described the deal as an “opportunistic issuance executed under favorable market conditions,” reflecting strong investor confidence in the company’s financial health and strategic vision. The success of this deal, which follows a previous $750 million bond issuance in January 2024, demonstrates SFL’s ability to tap into global markets while maintaining its focus on sustainable growth.

Revankar emphasized that the funds would be used to further strengthen SFL’s position as a leader in retail asset financing, with a clear focus on addressing the needs of India’s underserved populations. With assets under management exceeding ₹2.33 lakh crore and a network of over 3,000 branches, SFL is well-positioned to deliver on its promises of inclusive and sustainable growth.

Shriram Finance’s Strategic Vision

Shriram Finance’s $500 million social bond issuance is not just a financial milestone, but a critical step toward fostering inclusive economic growth in India. By focusing on underserved populations, such as first-time borrowers and MSMEs, SFL is setting an example for other financial institutions in leveraging global markets to drive local development. The success of this bond deal also highlights the growing importance of social and sustainable investments, a trend that is likely to continue as global investors seek opportunities that deliver both financial and social returns.