KKR to merge NBFC arm with InCred Finance2 min read . Updated: 28 Jul 2020, 03:38 PM IST
- The combined entity will operate under the InCred brand name, and post the deal, the merged loan book size is expected to be around ₹6,000 crore
Bengaluru: Private equity major KKR is looking to merge its wholesale non-banking financial company (NBFC) business with Mumbai-based InCred’s retail franchise and will invest in InCred as part of the deal. The combined entity will operate under the InCred brand name, and post the deal, the merged loan book size is expected to be around ₹6,000 crore.
KKR and InCred are said to have signed an exclusivity agreement to execute the deal.
Besides this investment, KKR along with other limited partners is expected to pick up a large minority stake in InCred and will become the largest investor bloc backing InCred, according to several sources, familiar with the discussions.
A KKR spokesperson confirmed the investment.
Mint couldn’t ascertain the quantum of the investment to be made or the valuation of the combined entity. Post this investment, KKR India Financial Services Ltd along with other marquee investors - Abu Dhabi Investment Authority (ADIA) and Texas Teacher Retirement System, will also join InCred’s equity roster, and are expected to get a seat on the board.
With its investment in InCred, KKR is doubling down on its bet in the Indian financial services space. In May, KKR had also invested ₹11,367 crore in Jio Platforms for a 2.32% stake in the company.
Four year-old NBFC, InCred, which was founded by former Deutsche banker Bhupinder Singh, has raised over ₹1,000 crores till date from a set of investors including - Investcorp, Manipal chief Ranjan Pai, Dutch Govt-owned FMO, Moore Venture Partners, Paragon, Elevar and OAKS Asset Management amongst others.
Last week, InCred announced that it had raised ₹500 crores in debt financing from various public sector banks and public financial institutions. With this debt, InCred was looking to expand its lending operations across select segments in the consumer, education and MSME markets.
At present, InCred claims to have over 500,000 customers in 20 plus cities across India. Further, just last month, InCred which leverages risk analytics and technology to disburse loans, also completed the acquisition of digital lending platform, Qbera, for an undisclosed amount.
Through its acquisition of Qbera, InCred aimed to augment its digital distribution strengths, which included disbursing loans through digital platforms.
KKR, at present, manages assets worth $277 billion globally, and also has a controlling interest in other Indian companies like IndiGrid Trust - Infrastructure Investment Trust, EuroKids International Ltd., Max Hospitals, Avendus Capital and Ramky Enviro Engineers.
Last week, Mint reported that digital lending space in India may undergo a wave of consolidation as smaller digital lenders and non-banking financial companies (NBFCs) begin scouting for buyers, with the pandemic and ongoing moratorium (from Reserve Bank of India) on payments severely denting business.
Traditional NBFCs are also in early discussions with small digital lenders to snap up their technology offerings to digitise their disbursement processes.