Biplab Das 
In a landmark move, Samvardhana Motherson International Limited (SAMIL) has announced the successful pricing of 144A/Reg S 5.625% US$ senior, secured guaranteed notes, raising USD 350 million through its subsidiary, SMRC Automotive Holdings Netherlands B.V. (SAHN BV). This marks the Motherson Group’s return to the US bond market after eight years and its first issuance with a dual investment-grade rating from Moody’s and Fitch.
Strong investor confidence
The bond issue saw overwhelming interest from global investors, with the order book peaking at over USD 2.2 billion, representing an oversubscription of six times the issue size. This robust demand reflects the confidence of the global investor community in the creditworthiness and business strength of the Motherson Group.
Strategic financial move
Vice Chairman Laksh Vaaman Sehgal stated, “The success of this transaction is a testament to the Motherson Group’s adherence to its prudent financial policies, underscored by recent rating upgrades by various international rating agencies. Motherson today is a strong and diversified platform to support its customers globally. We are grateful to both our customers and investors for their trust and confidence in us.”
Key highlights of the bond issue
Optimised Borrowing Costs: The strong investor interest allowed the notes to be issued at a tight pricing, translating into a coupon of 5.625%, optimising borrowing costs for the Motherson Group.
Debt Neutral Issuance: The proceeds from the bond issue will be utilised to repay existing debt, making the issuance debt-neutral and further strengthening the company’s financial position.
Diversified Investor Base: The issuance has significantly diversified Motherson’s debt investor base, with over 96% of allocations going to asset managers, insurance companies, and sovereign wealth funds. The remaining allocations were made to banks, private banks, and other accounts.
Global Participation: The transaction saw balanced participation from investors across regions, with 40% from Asia, 38% from EMEA, and 22% from North America.
Listing and management
The notes will be listed on the Frankfurt Stock Exchange, providing liquidity and visibility in the European market. Leading financial institutions including BNP Paribas, Citigroup, HSBC, J.P. Morgan, and MUFG acted as Joint Global Coordinators and Joint Lead Managers for the transaction. DBS and Standard Chartered also participated as Joint Lead Managers.
Market implications
This successful bond issue underscores the Motherson Group’s robust financial health and strategic foresight. The dual investment-grade rating from Moody’s and Fitch signifies strong confidence in the company’s long-term prospects and stability. This move also highlights the group’s commitment to maintaining a diversified and resilient financial structure.
Why this matters
The Motherson Group’s return to the US bond market is not just a financial manoeuvre but a strategic reinforcement of its market position. The oversubscription and the diversity of investors reflect global confidence in the group’s operational and financial robustness. This capital will allow the company to refinance its existing debt at more favourable terms, ensuring financial stability and the ability to pursue growth opportunities.
Future prospects
With a solid financial base reinforced by this bond issue, the Motherson Group is well-positioned to continue its expansion and innovation in the automotive industry. The capital raised will support its strategic initiatives, enabling the group to enhance its product offerings and global footprint.
Samvardhana Motherson’s successful bond issuance is a clear indicator of its financial strength and strategic vision. By securing a USD 350 million investment at favourable terms and gaining significant interest from a diversified global investor base, the company has reaffirmed its position as a key player in the automotive sector. This move not only optimises its debt structure but also sets the stage for future growth and stability in an increasingly competitive market.
