InCred may raise up to ₹600 crore, to enter wholesale lending

Mumbai: Mumbai-based InCred Finance plans to begin wholesale lending from August and is in talks to raise fresh funding, two people aware of the development said.

“The company has received Reserve Bank of India (RBIs) approval for the wholesale business which will be housed under a separate entity and is in the process of raising fresh equity,” said the first of the two persons cited above, both of whom spoke under condition of anonymity.

“InCred is looking to raise anywhere between ₹ 500 to 600 crore and is in active discussions with potential investors,” said the second person.

An email query sent to InCred remained unanswered until press time on Tuesday.

InCred was founded in 2016 by former Deutsche Bank senior executive Bhupinder Singh in 2016. Its backers include former Deutsche Bank Co-CEO Anshu Jain, Manipal Group’s managing director and CEO Ranjan R. Pai, and Gaurav Dalmia, founder and chairman of Landmark Holdings (Dalmia Group).

In March last year, private equity fund Paragon Partners founded by Siddharth Parekh, son of HDFC chairman Deepak Parekh invested around ₹ 25 crore in the company. Also in October last year, InCred raised equity investment from PE firm IDFC Alternatives which brought close to 10% stake for ₹ 80 crore, valuing the company at about ₹ 800 crore.

InCred focuses on four lending verticals: affordable housing, small and medium enterprises, education and consumer finance. Since its launch till the end of October last year, InCred has lent nearly $16 million to over 1,000 borrowers. With the planned foray into the commercial lending business, it will join bigger rivals, who have stepped in to fill the space vacated by public sector banks as many of them continue to be under RBI’s prompt corrective action (PCA) that restricts their lending abilities.

In the past few months, several prominent NBFCs have raised fresh equity to fund their loan books. In September, Bajaj Finance Ltd, one of India’s largest consumer-focussed NBFCs, raised ₹ 4,500 crore through a qualified institutional placement (QIP).

In December, rural-focussed Mahindra Financial Services Ltd raised ₹ 1,056 crore through a QIP. According to a study by Crisil, between FY12 and FY17, the wholesale finance outstanding of NBFCs in India has grown at a CAGR of 31%.

According to the study, the NBFC share in corporate credit could be as high as 21% in the next two years, with sectors such as real estate, infrastructure finance, and structured credit space accounting for the most.