Mumbai: Faering Capital, a mid-market-focused private equity (PE) firm founded by Aditya Parekh and Sameer Shroff, has led a 100-crore Series B round of funding in pre-owned two-wheeler financing company WheelsEMI.

WheelsEMI, run by non-banking financial company WheelsEMI Pvt. Ltd, is a specialist lender focused on used two-wheeler financing. The company was founded by former senior Bajaj Auto executives Srinivas Kantheti, Karunakaran Vadakkepat, CH Phaneendra Kumar and Ratheesh Bharathan in 2017.

This is the fourth investment from the PE firm’s second fund. Its earlier investments include small finance bank Utkarsh, forex company BookMyForex and packaged foods company Prataap Snacks.

“We have led a Series B round of 100 crore in Wheels EMI. Faering has invested 64 crore, while the rest was invested by existing investor Elevar. WheelsEMI is a pioneer in the pre-owned two-wheeler space, which is a large market with 17-18 million used two-wheelers being sold in the country," said Faering Capital’s co-founder and managing director Aditya Parekh, who is the elder son of HDFC Group chairman Deepak Parekh.

While new two-wheelers are financed by banks, there is a lack of organized financing for pre-owned two-wheelers, a segment which WheelsEMI is targeting. “They will close the year with around 120 crore of assets under management. Today, they are present in nine cities including Mumbai, Bangalore and Pune."

WheelEMI will use the capital to pursue growth plans, which will see the company expand its network to other cities. “They will go deeper in the cities they are already in and will also expand to new cities. The goal is to be in 50-60 cities in the next few years. But the expansion will be in a very calibrated manner." Parekh also said Faering will help the lender access credit lines from financial institutions such as banks.

For Faering, the investment in WheelsEMI is an attempt to tap the growing demand for pre-owned vehicles. “In addition to it, being a financial services play, what we are excited about is the rapid consumption growth in India. There are two major drivers for two-wheeler growth. One, is increasing urbanization and people buying their first vehicle. Two, is the rise of the delivery culture in India—food delivery, e-commerce delivery," said Shroff, who is also a co-founder and managing director at Faering Capital.

He said several people are buying used two-wheelers to take up a delivery person’s job. “So this is one of the ways of participating in the boom of the delivery culture of India without actually investing in one of the delivery companies."

Faering recently closed its second fund with a total corpus of $200 million (approximately 1,400 crore). In 2009, Faering had raised 800 crore for its first fund. “Around 70% of the fund has been raised from domestic investors, while the remaining 30% came from overseas investors," said Shroff.

“We felt that for the growth of the platform it is good to bring in marquee international investors and that’s why we got a third of the fund from them," said Shroff.

The firm has exited several of its investments from the first fund to return a significant amount of capital to its investors. “We have returned almost 1-times capital from the first fund. We have completely exited companies such as RBL Bank, Manipal Healthcare and Snowman Logistics and we have also had some part exits," Shroff said.

The PE firm expects to return 3-times capital from the first fund as it makes more exits in the coming years, he added.

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