New Delhi: Consumer and small and medium-sized enterprise (SME)-focused lender InCred Finance’s founder Bhupinder Singh, along with InCred’s private equity (PE) investors including Siddharth Parekh’s Paragon Partners, has invested ₹ 300 crore to incubate a new business under the InCred platform, said two people aware of the development.
InCred was founded in 2016 by former Deutsche Bank senior executive Bhupinder Singh. Its backers include former Deutsche Bank co-chief executive officer Anshu Jain, Manipal Group’s managing director and CEO Ranjan R. Pai, and Gaurav Dalmia, founder and chairman of Landmark Holdings (Dalmia Group). InCred focuses on four lending verticals: affordable housing, small and medium enterprises, education and consumer finance.
“Bhupinder Singh and some of his PE backers such as Paragon Partners, founded by Siddharth Parekh, have pooled together an investment of over ₹ 300 crore to help InCred diversify its business from its existing mainstay business of retail and SME lending. While Singh has invested around ₹ 40 crore, Paragon Partners has invested ₹ 50 crore. Several high net-worth individuals have also invested alongside them," said one of the two people cited above, requesting anonymity, as he is not authorized to speak to reporters.
Mint had reported in July that InCred was in talks to raise funds as the company was looking to enter wholesale lending business.
Emails sent to Singh did not elicit any response, while Parekh declined to comment.
Parekh’s Paragon Partners is already an investor in InCred. In March last year, the PE fund invested around ₹ 25 crore in the company. Also in October 2016, 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.
PE interest in the Indian financial services industry has continued to remain high despite issues such as non-performing assets (NPAs) and financial frauds in the Indian banking sector.
According to a report by EY and Indian Private Equity and Venture Capital Association, the Indian financial services sector witnessed $4 billion of investments in the first half of 2018, the highest ever half-yearly investment, including Warren Buffett’s Berkshire Hathaway’s investment in Paytm.
In the first half of 2018, PE and VC firms had invested about $4.1 billion across 74 deals, up from about $3.2 billion across 53 deals in the same period a year earlier. Overall, PE and VC investments surged 49% in the first half of 2018 to $15.2 billion.
Apart from InCred, Paragon Partners has invested in companies such as Capacit’e Infraprojects Ltd, Maini Precision Products Ltd and Cravatex Brands. Paragon Partners announced in November last year that it had secured commitments worth $120 million for its first PE fund Paragon Partners Growth Fund-I. The PE firm, founded by Parekh and Sumeet Nindrajog, had raised $50 million in its first close in March 2016.