CDC Group Plc, the UK government-owned development finance institution, will invest Rs 1,000 crore ($150 million) in the non-banking financial arm of IIFL Holdings Ltd, the Indian company said on Wednesday.
The UK-based firm will make the investment in India Infoline Finance Ltd by subscribing to equity shares and compulsorily convertible preference shares, IIFL Holdings said in a stock-exchange filing. It will hold about 15% of the NBFC after the preference shares are converted into equity.
The financial services company said CDC’s investment will help it in expanding the lending business and address the capital needs of the under-served segments.
India Infoline Finance was set up in 2004. It doesn’t accept public deposits and offers home loans, gold loans, vehicle loans and business loans to small and medium-sized companies through almost 1,000 branches. For the year through March 2016, its loan was Rs 17,770 crore and net profit of Rs 340 crore.
“CDC was the first private equity investor in IIFL during our startup phase in 1999…IIFL’s strategy of focusing on small-ticket retail credit to under-served geographies and segments resonates with CDC’s investment objectives,” said IIFL Group founder Nirmal Jain.
CDC invests in India through both the fund-of-funds route and via direct investments in companies. It makes both equity and debt investments and has put money in several banks, NBFCs and microfinance institutions previously, besides companies in the real estate, healthcare and other sectors.
In May, the firm agreed to invest $25 million in the affordable housing projects of Tata Housing Development Company.
In January, it put in about $50 million in Janalakshmi Financial Services Pvt Ltd in its fourth deal in the Indian microfinance segment after Ujjivan Financial, Equitas Holdings and Utkarsh Microfinance.
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