Mumbai: Private equity firm Everstone Group is in talks to bring in Gunit Chadha, former chief executive of Deutsche Bank AG Asia Pacific, for IndoStar Capital Finance Ltd, said two people aware of the development.
IndoStar, a non-banking financial company (NBFC) focused on corporate and small and medium enterprises, was started in 2011 by PE arms of Everstone Capital Management, Goldman Sachs Group Inc., Ashmore Group Plc, and Baer Capital Partners and others, with an initial capital base of Rs1,000 crore. Everstone Capital is the largest shareholder in the company and owns about 50% of IndoStar.
“Everstone is in discussions with Gunit for bringing him on the board of IndoStar. Talks are at a very early stage and the two parties are discussing the details of the partnership,” said one of the two people aware of the development, requesting anonymity as the talks are private.
“Gunit can come on board as the overall leader, pick up a substantial stake and lead the company possibly as the chairman,” said the second person cited above, also requesting anonymity. “The talks are currently at a preliminary stage.”
Sameer Sain, founder and managing partner of Everstone Capital, declined to comment on the development.
Chadha also declined to comment. “I am just back from a very hectic travel and currently enjoying my downtime,” he said over the phone.
Talking generally about the financial services opportunity, Chadha said, “We are keen to do something big in the financial services space—through bank or non-bank, we don’t know. It is too early to decide on anything. I’m in no hurry before early 2017. Independent professionals getting bank licence is a great opportunity.”
“The company is not aware of any such discussion,” An IndoStar spokesperson said in an emailed response.
On 14 June, Mint reported that Chadha had resigned from Deutsche Bank and was set to leave the bank effective 17 July. Chadha, 54, had joined Deutsche Bank in 2003 as the chief executive for the global lender’s India business. In 2012, he was elevated to co-CEO for its Asia Pacific business and later in October 2015 was appointed in his current role as CEO for the Asia Pacific, in charge of 16 regions.
Under Chadha’s leadership, Deutsche Bank had started its investment banking, retail banking and institutional broking business in India. Prior to Deutsche Bank, he was CEO of IDBI Bank Ltd.
Everstone’s talks with Chadha come at a time when IndoStar has expanded its bouquet of lending products to include housing finance. The development also comes at a time when IndoStar has been firming up its plans for a public listing.
Coincidentally, IndoStar in August hired a former Deutsche Bank banker Prashant Joshi to head its SME and retail business.
In July, PTI reported that the corporate and SME-focused IndoStar will be entering the retail lending space by launching a home finance unit as part of its asset diversification strategy.
The home finance arm will focus on small ticket lending to self-employed people.
Currently, the company is focused on corporate lending, with the segment accounting for over 70% of the close to Rs4,500-crore loan book, PTI reported. The rest comes from real estate developers and SME lending. The NBFC is looking to increase the SME book to Rs1,500 crore this year from around Rs400 crore last year. Since its launch in 2010, the NBFC’s loan book has grown to Rs4,265 crore, at an average annual pace of 49%.
For the financial year 2015-16, the NBFC’s revenue increased 31% to Rs355 crore from Rs270 crore in the previous year, while loans grew by 24% to Rs4,265 crore from a year ago. In 2015-16, it reported a net profit growth of 29% at Rs192 crore. Its net non-performing asset (NPA) ratio was at 0.2%.
If Chadha joins IndoStar, it will be another instance of a prominent former banker entering the NBFC space in India.
Recently, former Deutsche Bank executive Bhupinder Singh started a technology-driven NBFC InCred, focusing on education loans, mortgages and SME lending. Singh has been joined by Anshu Jain, former co-CEO of Deutsche Bank, who has a minority stake in the NBFC.