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Fullerton Plans VC Fund and Advisory Services; Gets $50M from Temasek

16 August, 2008

From private equity funding to venture capital investing, Temasek is slowly cementing its presence in India. Fullerton India Credit Company Ltd, the financial services firm owned by Singapore’s sovereign wealth fund Temasek, is looking at launching venture capital fund in India besides looking at the option of starting advisory services for VC investments. This could be an extension of Fullerton’s existing lending business to small business owners. Fullerton currently lends to salaried individuals and small business owners where the former is largely a personal finance lending business.

Fullerton, which operates one of the largest non banking financing companies (NBFC) in the country with 800 branches employing 15,000 people, is also looking to get into new business areas such as equity brokerage besides expanding its lending business into products like two-wheeler and consumer durable financing.

VCCircle had first reported that Fullerton is eyeing equity brokerage and has applied for a broking license. The brokerage business would operate as a separate subsidiary of Fullerton India Credit Co, which is a subsidiary of Singapore’s Fullerton Financial Holdings which in turn is the wholly owned arm of Temasek. Teemasek has been one of the most active private equity investors in India.

In the meantime, Temasek is also bringing in $50 million over the next 2-3 months into Fullerton India. This is part of the $300 million committed by the parent firm in the past with the balance $250 million already been invested in the firm. Fullerton India is also looking at new sources of funding for its lending business which has crossed Rs 3,200 crore in disbursements.

While earlier it was banking on commercial papers, going forward it would look at issuing debentures and is also planning for a private placement of bonds. However, tthere are no plans for an equity dilution as reported earlier. Fullerton which started its India operations in January 2006 with the takeover of South-based Dove Finance, is looking to start generating operating profits by September this year.

The firm is also looking to enter product lending business by rolling out new loans for two-wheelers, consumer durable, computers and commercial vehicles as secured lending instruments. This comes at a time when some large banks like ICICI and Citibank have been pruning this part of the portfolio in the wake of sub-prrime crisis and some firms like GE Money looking for buyers.


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Fullerton Plans VC Fund and Advisory Services; Gets $50M from Temasek

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