Listed non-banking financial company IndoStar Capital Finance Ltd announced on Monday that it will acquire the commercial vehicle financing business of India Infoline Finance Ltd (IIFL).
The acquisition is profit-accretive for IndoStar and will help the company accelerate its goal of becoming a leading retail NBFC, IndoStar said in a stock-exchange filing.
It did not disclose the deal value but said that the cash consideration for the slump sale will be a lump sum that will be determined on the closing date, which it expects to be before March 31.
IndoStar Capital counts private equity firm Everstone Capital among its investors.
Separately, IIFL Holdings, the listed parent of India Infoline Finance Ltd, said that the sale of the vehicle financing unit will help the company focus on scaling up its other existing business segments of affordable home loans, gold loans, small business loans and microfinance.
IIFL's vehicle financing business had a turnover Rs 420.11 crore, which accounted for 17% of its revenue, as on 31 March 2018.
Shares of IIFL Holdings closed at Rs 380 apiece on the BSE on Monday, down 8.6% from the previous close. Shares of IndoStar Capital Finance ended the day at Rs 320.90 apiece, 3.57% higher than its closing price on Friday. The benchmark Sensex closed 0.31% higher.
The firm was established in 2009 as RV Vyapaar Pvt. Ltd. It was renamed as IndoStar in 2014. The company floated its initial public offering (IPO) and listed on the exchanges last year after deferring its plan to go public in 2016.
IndoStar operates four principal lines of business — corporate lending, small and medium enterprise (SME) lending, vehicle financing and housing financing.
A consortium of IndoStar and Everstone was believed to be among the bidders for Aadhar Housing Finance Ltd. However, the home financing firm was eventually acquired by private equity giant Blackstone last week.
Deals in the space
The vehicle financing segment has recorded a couple of deals in recent months amid a liquidity crunch in the broader NBFC space.
In December last year, mid-market private equity firm Faering Capital invested Rs 100 crore (about $14 million) in WheelsEMI Pvt. Ltd, an NBFC which provides financing for pre-owned two-wheelers, as part of the company's Series B round of funding.
A few weeks before that, Jaipur-based Kogta Financial (India) Ltd had raised Rs 154 crore ($22 million) in a funding round led by Morgan Stanley Private Equity Asia.
Kogta offers financing for commercial vehicles, tractors and cars, besides small-ticket loans against property to micro, small and medium enterprises.