MAS Financial Services eyes over $10M deal; Dutch investor to part exit
A private investor is in talks to buy a minority stake in PE-backed MAS Financial Services Ltd through a secondary deal where one of the existing investors may part exit its investment, a top company executive told VCCircle. The overall deal would be around $10 million (around Rs 65 crore) and the entire money would go to the existing investor in the transaction.
Mukesh C Gandhi, director (finance), MAS Financial Services Ltd said, “The fifth round of capital is going to be through compulsorily convertible preference shares (CCPS) and would provide part exit to one of the current investors.”
He did not share further details on the proposed deal but sources said existing investor Netherlands Development Finance Co (FMO), which invested $10 million in 2008, would exit 60 per cent of its investment in the transaction. This would mean it could encash almost 2x in absolute returns over a five-year investment horizon.
In the same year (2008), ICICI Mezzanine Fund also invested Rs 40 crore. MAS Financial also counts German financial institution DEG among its investors.
The Ahmedabad-based non-banking finance company (NBFC) offers commercial vehicle, MSME, two wheeler funding and it is now adding SME and affordable housing finance (through its housing finance subsidiary).
Gandhi said the company has attracted interest from the investors who have been in the microfinance space besides others from mainstream private investor community and has raised capital of Rs 155 crore to date.
He said the company has a capital adequacy ratio of 21 per cent (against stipulated level of 15 per cent) and hence does not require large infusion of capital immediately.
But it is aiming to increase its asset under management (AUM) to around Rs 4,000 crore by FY17 from Rs 687 crore in FY12.
To support growth during the period, the company would look for more funding opportunities. It is estimating that it would generate internal accruals of Rs 210 crore over the period and expects to raise Rs 350 crore by 2017 to support expansion.
“Next quantum growth in AUM will come from secured and relatively bigger ticket loans in these areas. The company caters to informal customers whose income ranges from Rs 7,000 to Rs 35,000 per month and there is huge untapped market in these segments,” Gandhi said.
Currently, the company has branches in Gujarat, Rajasthan and Maharashtra and has begun operations in Madhya Pradesh, Tamil Nadu and Karnataka.
(Edited by Joby Puthuparampil Johnson)