Mumbai: ChrysCapital Advisors Llp, the largest home-grown private equity (PE) fund, has acquired a significant minority stake in Thirumeni Finance Pvt. Ltd, a Bengaluru-based non-banking financial company (NBFC) that operates under the name Varthana, according to senior executive.
Varthana, which specializes in providing debt financing and support to affordable private schools, has raised Rs350 crore through a combination of a primary raise and secondary stake sales by investors lead by ChrysCapital, along with existing investors.
ChrysCapital is in final stages of talks to invest around $50 million (Rs320 crore) to acquire a significant minority stake in Varthana, Mint reported in January.
Existing investors of Varthana include Elevar Equity, LGT Venture Philanthropy, Omidyar Network and Kaizen Private Equity. Kotak Investment Banking was the financial advisor to Varthana.
Set up by Brajesh Mishra and Steve Hardgrave in 2013, Varthana provides loans, primarily to private schools catering to students from low-income households.
“ChrysCapital is delighted to partner with Varthana in its quest to improve the education facilities in India through financing and advisory services," said Ashish Agrawal, director, ChrysCapital.
Till date, Varthana has disbursed more than $35 million to schools that serve lower- and middle-income groups.
“We are very excited to welcome ChrysCapital to our amazing group of investors. Their proven experience in helping companies grow to new heights will help us build on our early progress," said Varthana co-founders Steve Hardgrave (CEO) and Brajesh Mishra (COO).
Varthana has already been funded by venture capital and PE firms since 2015.
In April 2016, Varthana raised Rs93 crore ($14 million) in a Series B round of financing from Kaizen Private Equity, Zephyr Peacock India, and Rs32 crore in Series A from marque investors, including former Credit Suisse banker Vikram Gandhi and Genpact Ltd founder Pramod Bhasin in 2015.
Varthana’s competitor Indian School Finance Co. Pvt. Ltd (ISFC), which lends to companies in the education sector, is also in discussions to raise around $30-35 million from PE investors, Mint reported in November.
Shiksha Finance, another NBFC focusing on school and student loans, had raised $2.5 million (Rs16 crore) through a mix of debt and equity from Michael and Susan Dell Foundation in September last year.
At a time when banks are tightening their purse strings with increasing bad loans, Indian NBFCs are growing their market shares. The total NBFC retail credit along with SME exposure stood at Rs6.2 trillion as on December 2016, according to a 2017 report by PwC India.
ChrysCapital has investments in various NBFCs—Magma Fincorp Ltd, which is engaged in vehicle financing, housing finance and small and medium enterprises financing; Hero FinCorp Ltd, which is in two-wheeler financing, supply chain finance and business loans; and AU Small Finance Bank, a Rajasthan-based NBFC involved in vehicle financing, property-backed business loans and mortgages.
With over $3 billion of assets under management across seven funds, ChrysCapital has made close to 80 investments in India and 60 full exits.