Mumbai: Blackstone Advisors India Pvt. Ltd has picked up a stake in Financial Information and Network Operations or Fino Ltd, for Rs150 crore, betting that the country will persist with its drive to ensure more of the population has bank accounts.
Fino provides “integrated technology solutions and physical network to enable financial inclusion in India,” the company said. Its promoters are ICICI Bank Ltd, Corporation Bank Ltd, HSBC Bank, ICICI Lombard General Insurance Company Ltd, IFMR Trust, Indian Bank Ltd, Intel Inc. and Union Bank Ltd.
The company has been growing at a compounded annual growth rate (CAGR) of almost 100% in the last few years, riding on the growth opportunities provided by the number of unbanked households in India, remittances and the need for health insurance.
“We will deploy this money for growth and expanding our customer base and expansion,” said Manish Khera, chief executive officer of Fino. Ernst and Young was adviser to the transaction, following which Blackstone will get one board seat.
Blackstone will get a 26% stake in the company, according to a person familiar with the transaction. Mint was unable to independently verify this.
Fino’s product suite includes savings bank accounts, loans, recurring deposits, remittances, insurance and government disbursements. It currently has a customer base of more than 20 million. The company acquires more than 50,000 customers a day and handles around 3 million transactions a month, it said in a release. It has a network of 10,000 agents across 22 states and more than 266 districts in the country.
“Given the low penetration of banking services in the segment, there is a huge upside and growth potential for such companies,” said Ravi Trivedy, executive director, insurance, pensions, mutual funds and financial services, at KPMG Ltd. “Whichever company has the ability to scale up the distribution, good business model and has good governance will continue to attract private equity investments.”
Non-banking finance companies (NBFCs) and microfinance institutions (MFIs) will continue to drive growth in this segment and companies such as Fino that provide technology and processing support will see a huge opportunity, Trivedy said.
In May, Kohlberg Kravis Roberts and Co. LP (KKR) and International Finance Corp. (IFC), the private investment arm of the World Bank, together invested Rs440 crore in Magma Fincorp Ltd, a Kolkata-based NBFC. KKR paid Rs236.31 crore for a 14.95% stake, while IFC has invested Rs202.4 crore for a 12.8% stake.