MICROCAPITAL BRIEF: Cholamandalam of India to Borrow $185m from Citibank, Guaranteed by OPIC, for Vehicle Finance for SMEs

Cholamandalam Investment and Finance Company, a member of India’s Murugappa Group, recently agreed to borrow USD 185 million from US-based financial services firm Citibank. The Overseas Private Investment Corporation (OPIC), an agency of the US government that promotes economic partnerships in countries deemed important to US interests, is guaranteeing repayment of the loan. Chola plans to use the proceeds to extend 25,000 vehicle loans to small and medium-sized enterprises (SMEs) in rural and other underserved areas. As part of the arrangement, Chola has agreed to tighten its environmental and social management system.

In addition to vehicle loans, Chola offers home loans, business loans, financial advice and stock brokerage services. It has 1,000 branches and manages assets valued at INR 575 billion (USD 8.1 billion). With 50,000 employees worldwide, the Murugappa Group has interests in finance, agriculture, manufacturing and engineering.

Headquartered in the city of New York, Citi offers consumer and commercial banking, brokerage, asset management, and institutional securities and transactions services. It carries out its philanthropic activities, including a financial inclusion initiative, through the Citi Foundation. Citi serves approximately 200 million customers in 160 countries. As of June 2019, it reports total assets of USD 2.0 trillion.

Established in 1971, OPIC provides loans, grants, advisory services and political-risk insurance to private equity funds and financial institutions as well as projects in the healthcare, energy, technology and education sectors. As of December 2018, the organization reported total assets of USD 9.6 billion and annual gross revenue of USD 250 million, closing the year with 112 active projects in 88 countries.

Sources and Additional Resources

OPIC project document
https://www.opic.gov/sites/default/files/files/9000093498.pdf

OPIC press release
https://www.opic.gov/press-releases/2019/opic-board-approves-projects-africa-indo-pacific-and-latin-america

Chola homepage
http://www.cholamandalam.com/

Murugappa Group homepage
https://www.murugappa.com/

Citi homepage
https://www.citigroup.com/

Citigroup financials
https://www.citigroup.com/citi/investor/data/qer219s.pdf

OPIC homepage
https://www.opic.gov/

OPIC 2018 Annual Report
https://www.opic.gov/sites/default/files/files/OPIC_FY_2018_Annual_Management_Report.pdf

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