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Scope of Debt Syndication and Its Market

Scope of Debt Syndication and Its Market


Category : Knowledge Center


Debt syndication is a financial process employed when a borrower requires a substantial amount of money beyond the capacity of a single lender or exceeds the risk-exposure level of a single financial institution. In such cases, funds are aggregated from multiple lenders through a structured process known as debt syndication.

What is Debt Syndication?

Debt syndication involves a collaborative effort among a group of lenders to fund various portions of a loan for a single borrower. Typically, a third party or consulting firm facilitates and administers this process due to the complexity of managing multiple lending parties. Libord, with its established credibility in the market, has fostered key connections with various lending parties to offer comprehensive financing solutions.

Applications of Debt Syndication

Initially utilized by Fortune 500 companies with extensive funding needs, syndicated loans are now sought after by both small and medium enterprises (SMEs) and large corporations. These loans are used to finance diverse projects such as power plants, steel plants, refineries, as well as to fund takeovers, mergers, and acquisitions. As the demand for funds continues to grow in the Indian market, debt syndication emerges as a viable alternative for companies seeking financing.

The Need for Debt Syndication in India

Several businesses in the Indian market face the challenge of securing additional financing solutions to facilitate operational scaling and growth. Traditionally, the Indian debt market lagged behind its equity counterpart, limiting financing options. While the equity route offers a means to raise funds, it involves relinquishing a portion of the business and diluting ownership interests.

Debt syndication in India has addressed this challenge, acting as a bridge between equity and debt markets. The increasing availability of syndicated loans provides business owners with alternative avenues to raise funds without diluting ownership.

Moreover, the cumbersome process of coordinating with multiple individual lenders has been streamlined through syndicated loans. The growing availability of these loans is expected to benefit many corporations and entrepreneurs in the Indian market, offering a structured financial product to meet diverse business needs.

Libord Advisors Pvt. Ltd. assists corporates in arranging debt syndication from various FI’s, banks, and NBFCs; hence, as the demand for financing solutions continues to rise in India, debt syndication emerges as a valuable and efficient option for businesses looking to scale their operations and achieve sustained growth without compromising ownership interests.

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