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MUMBAI : TVS Credit Services Ltd, the vehicle financing arm of TVS Motor Co., is planning to raise about $150 million through a share sale that may see some of its existing investors pare their holdings, said two people with knowledge of the development.

The deal is expected to value the Chennai-based non-banking financial company at around $800 million, one of the people cited above said on condition of anonymity. The company is owned 85% by two-wheeler maker TVS Motor.

TVS Credit has appointed the Indian investment banking arm of Japan’s Nomura Holdings to run the transaction. Nomura has reached out to potential investors. Representatives for TVS Credit and TVS Motor did not respond to requests for comment. Nomura declined to comment.

The identity of the investors who could pare their stakes through the share sale could not be ascertained.

TVS Credit’s other shareholders include housing finance company HDFC Ltd, which has about 6.1% stake, and Phi Capital which holds around 4% stake in the company, according to VCCEdge. Employees also hold some stake in the company. “The process is still early," the second person cited above said, referring to the planned fundraising. He said investor bids are expected in January. The planned share sale in TVS Credit comes as parent TVS Motor separately engages in discussions to raise $500-600 million as part of its electric vehicle push, Mint reported on 6 June. TVS Credit was started in 2009 when it secured a licence from the Reserve Bank of India. In FY22, TVS Credit extended total loans of about 12,533 crore, up from 8,627 crore in the previous year, according to its annual report. Nearly 31% of the loans sanctioned in FY22 were for two- wheeler purchases, while around 27% was for tractors. TVS Credit also provides loans for used cars and used commercial vehicles, in addition to businesses, consumer durable purchases and personal loans, as per its 2021-22 annual report.

The company reported a net profit of 120.73 crore on an operating revenue of 2746.45 crore for the year ended March 2022. This marked an increase from a net profit of 96.98 crore on revenue of over 2237.9 crore in FY21.

According to a June 2022 report by credit rating agency Crisil, TVS Credit is integral to TVS Motor’s plans to grow its market share in the domestic automobile market as it is a captive financing unit. TVS Credit finances 20-26% of the parent’s domestic sales by volume, the report said. TVS Motor has infused 792 crore into TVS Credit since FY12, bringing its net worth to 1,864 crore and gearing of 7.0 times as on March-end 2022, the report said.

“Strong systems and processes are expected to enable TVS Credit to maintain sound asset quality. While there was an uptick in delinquencies due to impact of Covid-19 pandemic, the same has come down in recent quarters," Crisil said. The company saw a change in management in September this year, when former Bajaj Finance executive Ashish Sapra took over as the new chief executive officer, after longstanding CEO G. Venkatraman retired.

ABOUT THE AUTHOR
Ranjani Raghavan
Ranjani Raghavan writes about the Indian investment ecosystem with a focus on venture capital, private equity and startups. Outside of work, she enjoys sketching and birding. You can find her @ranjanir_
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