Warburg Pincus to invest $50 mn in Au

Mumbai: Warburg Pincus India Pvt. Ltd will invest $50 million in Au Financiers (India) Pvt. Ltd, a Jaipur-based non-banking financial company (NBFC), providing a partial exit to Motilal Oswal Private Equity Advisors Pvt. Ltd, two people with knowledge of the matter said.

The transaction is in the final stages of documentation, both persons confirmed. “We are a fund and have to exit some day. Besides, we had to return some money to our investors and have got an attractive proposition,” confirmed a senior Motilal Oswal official. The fresh money will be used for company expansion in existing and other geographies, besides plans to enter housing finance. A Motilal spokesperson declined comment.

Incorporated in 1996, promoters hold less than 50% in Au Financiers while private equity (PE) investors have a majority. The company offers commercial vehicle and car loans, small and medium enterprise (SME) loans, and loans against property. Operating in the semi-urban and rural segments, the NBFC has 141 branches across Rajasthan, Maharashtra, Gujarat, Goa, Punjab, Madhya Pradesh and Chhattisgarh, according to its website.

The International Finance Corporation (a member of the World Bank Group), Motilal Oswal Private Equity and other promoters infused Rs 60 crore into the NBFC in the second round of funding in 2010. Au raised Rs 20 crore in the first round of funding in 2008, which came from Motilal. The company had been in talks with Carlyle India Advisors Pvt. Ltd and a few other funds, Mint had reported on 2 February.

Ernst and Young Pvt. Ltd is the financial adviser to the company. Ladderup Corporate Advisory Pvt. Ltd is an adviser to the promoters. Au Financiers’ spokesperson said the company did not want to divulge any details of the transaction and company financials at this point in time. A Warburg spokesperson declined to comment.

“We were not willing to go beyond a certain investment,” said an official from another PE firm that had examined the assets of the company. The official declined to be named.

Au Financiers’ profit rose three-and-a-half times to Rs 42 crore on a total income of Rs 159 crore in fiscal year 2011, reported domestic ratings agency Credit Analysis and Research Ltd. For the first quarter of the current fiscal year (April-June 2011), profit increased 133% to Rs 7 crore from the year earlier. Total income rose to Rs 49 crore from Rs 19 crore, according to the report.

NBFCs have seen increasing interest from PE funds. In 2011, 34 investments worth $691.76 million were made in NBFCs compared with 33 transactions worth $267.35 million in 2009.

harini.s@livemint.com