Srei Group and CBL Corporation signs MOU to explore offering Surety and Guarantee Products
Bengaluru, 23rd October 2017: Srei Group, part of the Kanoria Foundation, and New Zealand's CBL Corporation Limited ("CBL") have entered into an MOU with the intent to form a first of its kind 50:50 joint venture company offering surety and guarantee bonds in India.
The jointventure company will offer performance guarantees and sureties through bonds toits customers in India for participating in projects in the infrastructure andallied sectors. This unique offering will reduce working capital needs of theplayers and shall facilitate project completions without delays, and allow themto develop and grow their businesses.
Indiais on the rise in terms of its infrastructure growth, and domestic businessesneed to comply with the ever changing requirements of the sector. Thecontractors who are undertaking projects across key sectors such as roads,energy, defense, telecommunication, and construction amongst others are themajor harbingers of this growth. However, even though the growth opportunity isimmense, these contractors in most cases are faced with the challenge ofworking capital issues because of the traditional models of financing thatcontinue to dominate the sector. Bringing in credit products such as sureties andguarantees which are widely used in other developed nations can help inbringing about a change, which is the need of the hour. These products can alsoprove to be a solid alternative to bank guarantees.
Commentingon the joint venture, Mr. Sunil Kanoria, Vice Chairman, SreiInfrastructure Finance Limited said, "In developed nations likeUSA, Canada, Germany, a Bid Bond or Surety or Performance Guarantee is a partof pre-qualification criteria for bidders, especially for government sponsoredinfrastructure projects. In India, the market for such instruments has not yetdeveloped. As of now, only banks provide such instruments in India and there isan urgent requirement to develop such products and offerings here. We are veryproud to partner with CBL Corporation Limited to offer this unique financialsolution to Indian businesses."
Mr. PeterHarris, MD, CBL Corporation noted that the decision to form the JV has been a jointeffort by Srei Group & CBL management over the last 12 months, while Mr.Alistair Hutchison, Deputy Chairman, CBL added that, "India is avibrant and growing country full of special people. CBL and Srei Group's JVwould add to India's growth aspirations by giving India's businesses greateroptions in the Guarantee and Bonding sector."
Mr. DeanFinlay, Director of International Business, CBL said, "CBL Corporation wasvery proud to be working with Srei Group where CBL believed there were genuinesynergies that would add value to our joint venture in what is a strategicallyvery important market for CBL."
Mr.Vikash Khandelwal, CEOof the proposed joint venture added, "We at Srei Group areexcited about this collaboration. CBL's strong track record and experience inbonds, sureties and guarantees, and Srei Group's expertise and knowledge of thelocal market will create value for businesses across India. The Government'sfocus on the infrastructure space has improved business confidence and many newinfrastructure projects are in the pipeline. We feel that this is the righttime to come together and start this journey."
Both SreiGroup and CBL shall research on the regulatory environment that some of theseproducts may encompass and structure an appropriate vehicle to offer theseproducts into the market in the most efficient and regulatory compliant manner.