Commercial vehicle financier Kogta in talks with PE funds to raise up to ₹150 crore

M. Sriram

Mumbai: Kogta Financial (India) Ltd is in talks with private equity funds to raise up to ₹ 150 crore, said two people aware of the development.

The Ajmer, Rajasthan-based company offers financing for commercial vehicles, tractors and cars, besides loans against property, and loans to micro, small and medium enterprises (MSMEs). It operates across Delhi, Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh.

“Kogta has been in talks with private equity funds to sell a minority stake for around ₹ 150 crore in growth capital. The fundraising will help the company expand its loan book and enter new geographies. This will be their second round of institutional funding,” said one of the people cited above, requesting anonymity.

“Investment bank Equirus Capital is advising the company on the fundraise,” he added.

E-mails sent to Kogta Financial’s senior management and Equirus Capital did not elicit any response till press time.

Kogta, incorporated in 1996, has about 65 branches, 600 employees and 50,000 customers. In October 2016, it had raised an undisclosed amount in a Series A round from IIFL Ventures Fund.

According to a report by credit rating agency Icra, as on March 2018, Kogta’s loan portfolio was at ₹ 428.51 crore.

Of this, heavy commercial vehicles accounted for 28.16%, light commercial vehicles comprised 28%, multi-utility vehicles made up 10.84%, while cars, tractors and two-wheelers comprised 15%, 6%, and 0.8%, respectively. The rest comprised non-vehicle loans.

Rajasthan accounted for 49% of its loan portfolio, followed by Gujarat at 30%, Maharashtra at 19% and Madhya Pradesh with 3%, the Icra report added.

On 1 November Rajasthan-based lender—Ess Kay Fincorp. raised $42 million from TPG Growth, American investor TPG’s middle-market fund, Mint reported.

Existing investors Norwest Venture Partners and Evolvence India Fund II also participated in the funding round. The lender had raised $32 million earlier in January.

Founded in 1994 by first-generation entrepreneur Rajendra Setia, EssKay facilitates purchase of used commercial vehicles, tractors, cars and two-wheelers, and provides business loans to small and medium enterprises.

As on 30 September, it had an active borrower base of around 100,000 individuals and assets under management of ₹ 1,550 crore.

Another commercial vehicle financier, Hinduja Leyland Finance had filed its draft documents for an initial public offering (IPO) of ₹ 500 crore.

Private equity investor Everstone, which had invested ₹ 200 crore in the company in 2013, plans to sell part of its stake through the IPO.

According to Icra, sales of domestic commercial vehicles fell 9.1% in the first quarter of 2018 following the goods and services tax (GST) roll out. But the industry saw a sharp recovery in the second quarter.

Icra expects 6-7% growth in commercial vehicle sales this year.