John, a manufacturing entrepreneur with a turnover of ₹550 crore, needed ₹100 crore to set up a new plant in Pune. Let us delve deeper into how we helped John meet his funding requirements through a structured debt syndication instrument.
Debt Syndication Process
Growing businesses often need large funds, but securing them from one lender can be challenging. Debt or Loan syndication helps by bringing multiple lenders together, ensuring adequate capital with shared risk. In John’s case, this approach provided the necessary funds for his infrastructure project with flexible terms. Let’s understand the debt syndication process from John’s case study.
A Case Study
John is an entrepreneur. He owns a manufacturing company called ‘JB Private Limited’. He has been in business for 10 years now. The turnover of his company is Rs. 550 crores. John has one plant and an office in Mumbai. Now his business has been growing rapidly. He realised that he should open one more plant. Due to the increasing orders, his plant cannot take the load. Therefore, he decides to start a new plant in Pune, as the efficiency of his business increases, and he will get more orders.
While he is calculating and analysing the amount of funding required for the business expansion, he realises that he needs funding of Rs. 100 crores. One financial institution cannot lend such a huge amount of loans. He goes to different banks to get loans from each one. Soon, he realises this process is complicated.
One of his business colleagues recommends that he approach Terkar Capital for debt syndication services. John approaches one of us, and we set up a meeting with him to discuss his requirements.
Financial Snapshot
Company Turnover | Rs. 550 Crores |
Amount Of Funding Required | Rs. 100 Crores |
Mortgage Availability | Factory Land, Commercial Property, Residential Property |
Company Industry | Manufacturing Industry |
Debt Syndication in Business Financing
Business financing often involves the complex process of Debt Syndication, where various lenders collaborate to provide funds to a borrower. Thus, during the meeting with Mr John, our team understood the requirements of the amount, the mortgage available, the expansion plan, and the expected rate of interest. After we understood his business situation and requirements, we were very clear that the desired amount could not be arranged from a single financial institution. We had to put in a couple of good bankers. So that can take partial exposure with pari passu. Thus, we informed Mr John that we will arrange the required funding through the debt Syndication facility.
Debt Syndication means that it takes place when a loan requested by a business or corporation is too large for one financial institution to lend. So, it is basically outside the scope of the lender’s risk exposure level. Several lenders take the funds. A debt syndication loan is a structured product that is arranged and administered effectively. So, this is generally done by a third party or a consulting firm since there are many lending parties involved.
Financial Analysis
Business Commencement Year | 2010 |
Amount Required | Rs. 100 Crores |
Moratorium Period | 24 Months |
Amount Sanctioned | 105 Crores. |
Customer Service Experience | 4.4/5 |
We prepared a proposal for John’s loan and reached out to various lenders regarding the debt syndication process. After a week, we had all the lending financial institutions, the documentation, and the soft approval ready. Once Mr John was OK with the soft approval, we executed the whole operational process. So, we arranged the funding. He was very happy with our services and the execution of the entire process.
Debt Syndication Process at Terkar Capital
Terkar Capital specialises in the debt syndication process. Our credibility in the market has helped us to cultivate many valuable connections with various lending parties. So, we provide the best debt syndication opportunities in India. We understand that the debt syndication process may be cumbersome and long-drawn for some of our clients. There is a need to meet and coordinate with multiple lenders. It is for these loans and needs to arrange many permutations and combinations.
But, no worries now!! Our highly trained executives at Terkar Capital are here to assist you at every step of the debt syndication process. Thus, being one of the best debt syndication firms, we coordinate the entire procedure for you. We get your debt syndicated at ease.
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