Poonawalla Fin likely to tap PEs

Poonawalla Fincorp Ltd might look at private equity (PE) investments for achieving its business targets, the company’s chairman Adar Poonawalla, said in an interview.

After selling its housing finance business to TPG earlier this year, the group has enough headroom to pursue both organic and inorganic growth, he said.

The leverage at present is quite modest—remaining below two times, Poonawalla added. “It’s worth noting that within the NBFC sector, the typical leverage can extend four to five times. Looking ahead, there’s no immediate necessity for capital infusion to sustain growth. Our existing capital reserves are more than adequate to support our expansion over the next three to four years, as per the guidance given.”

However, in due course, depending on the requirement, the group may explore seeking strategic funds and partners to achieve its business goals, he added.

“We retain the option to secure primary capital for the company, opening doors to potential collaboration with valuable strategic investors, PE funds, and partners, but not in the immediate, short term.”

Rising Sun Holdings Pvt. Ltd, a Poonawalla Group entity, bought controlling stake in non-banking financial firm Magma Fincorp in July 2021, and renamed it Poonawalla Fincorp, to foray into financial services, and has been investing in it for growing the business. However, it had sold the housing finance business to global PE company TPG in a ₹3,000 crore transaction.

The Poonawalla group owns Serum Institute of India, the vaccine manufacturer which emerged on the world map by increasing its capacity significantly to produce covid vaccines during the peak of the pandemic.

Poonawalla Fincorp had disbursed nearly ₹6,370 crore in Q4FY23, clocking the highest quarterly figure with a 151% increase over the year-ago period. Around 81% of the loans were disbursed digitally.

Recently, Cyrus Poonawalla Group brought former vice-chairman and chief executive of HDFC, Keki Mistry on its board as a strategic adviser. Mistry, who retired from HDFC on 30 June, believes there are a lot of growth opportunities in traditional banking, and that new-age financial technology companies do not pose any threat to the industry.

In separate interviews, Poonawalla shared his views on the financial services vertical and the company’s future fundraising plans, while Mistry shed light on his expectations of India’s banking ecosystem going forward. Mistry, who was approached by several financial services companies to shepherd the businesses in different capacities, decided to join the Poonawallas, considering the group’s pedigree, high governance standards and integrity, according to Mistry. He intends “to act as a sounding board” for the firm, which is helmed by Abhay Bhutada, the managing director of Poonawalla Fincorp.