We primarily focus on debt financing
It has been over a decade that Export Development Canada (EDC) — Canada's top export credit agency — is offering trade finance, export credit insurance and bonding services to companies in India. EDC, in collaboration with the Government of Canada, can help Indian companies reduce costs, increase efficiency, and innovate by introducing them to Canadian companies with the exact capabilities they want, says Bill Brown, regional vice-president, international business development, EDC, in an exclusive interview with Ashwin J Punnen. Excerpts:

You have been actively investing in India. What are your investment plans going forward?
We have been in India for over 15 years now and we are primarily focused on financing. We provide financing to corporates in the market that are looking for growth capital. We also introduce Canadian companies into their supply chains.
Over the last three-four years, we have seen a very strong growth curve in the finance chain. We primarily focus on debt financing but we also have a product that invest into corporates. EDC’s portfolio of investments in India is about C$4 billion right now, and that is based on the debt we have provided over the last 10 years. Additionally, as of 2016, EDC has committed C$273 million to Indian funds. On a yearly basis, we are providing up to C$1.2 billion worth of financing.

How many companies and sectors have you invested in?
We have supported over 16 companies in terms of financing, and overall, 36 financing transactions, if you take the smaller transactions across all sectors. The biggest partners we have within the region are Reliance and Larsen & Toubro and we also have strong relationships with a few public and corporate companies. While we facilitate business across all sectors, the priority ones for EDC in India are: infrastructure, clean technology, oil & gas, information and communication technology (ICT) and agri-food.
The good news is that EDC is looking to double the amount of financing it provides to Indian companies in the next five years. We just opened our very first financing branch in Singapore, which allows us to process transactions with Indian companies locally, rather than with the 12-hour time difference it used to take to connect to the financing team in Ottawa, Canada. The new office will make it easier and quicker to provide financial support for the various needs of Indian corporates.

How many big ticket investments?
The biggest transaction in 2016 was C$200 million and the smallest transaction was approximately C$50,000 to C$1 million, but all those 16 transactions that I have mentioned were large transactions. They were, I think approximately $5 million and up.

What kind of fiancing arrangement you had with the large Indian corporations?
There is a variety of financing that we provide, starting from syndicated loan structures as well as bilateral transactions. The majority of our funding into the market was done with the BCB structure, but we can also provide local currency financing, which we did under a Masala loan where we swapped the dollars into local currency as part of the loan structure.

Any plans to raise India specific funds, like masala bond or something?
Well, I am looking at that quite seriously right now, and there are a couple of steps that we have to go through before we get there. First is setting up a bank account within the market and to have a look at the currency account, and the second stage is where we look to raise funds within the market. I hope to have some progress in 2017, and in 2018 we would probably be ready to go in raising the funds in the market.

What is your outlook on India and Indian corporates?
EDC believes that there is a significant scope for Canada to play a very strong role in India. We believe India with its demographics power, gre-en technology and focus on infrastructure offer a great investment opportunity.

Last year you invested over a billion dollar, what is the kind of investment you are looking at this year?
Our target for 2017 is C$1.3 billion, about a 10 per cent increase over 2016. However, our medium to longer term growth until 2020 is to attain that number over $2 billion up to 2020.

Are you looking at the mid-sized firms in India?
We do finance a couple of mid-sized companies. However, the 16 large transactions I mentioned are really important because they were large corporates with significant capex needs or large projects. We believe that we can leverage a lot of play in terms of introducing Canadian companies in the supply chain. Apart from the 16 large transactions, we did 20 transactions in medium to smaller-sized companies in the Indian market. In these cases, we would finance pieces of equipment instead of providing large corporate lending. We can also do guarantees to banks.

Do you see cross-border M&A activities happening between Indian and Canadian companies?
We are seeing that larger sized corporates like Reliance and Tata are looking outside the country to invest not only to secure global supplying chains but also to expand their products. And EDC actually follows the Indian corporates to the market where they have been investing to provide financing there as well. As of last year, we provided financing in 200 markets around the world. The same goes with Canadian companies; they not only do business in India but they are also now following the Indian corporates into the markets they want to invest in.

You also have an insurance business. Can you throw some light on that?
We provide credit insurance to Canadian companies and exporters selling their products, which mitigates risks and allows them margins on their bank lines. Secondly, we provide political risks insurance for companies that are investing in the bond markets. From toll roads to mining structure to corporate structure, within those markets where there may be a concern over the transfer of currency or expropriation of property, for example.