KKR to inject $150 mn into India NBFC after spike in bad loans, top-deck shuffle

By Narinder Kapur

  • 15 Jan 2020
Credit: VCCircle

Private equity firm KKR & Co. Inc. has committed $150 million (about Rs 1,063 crore) to its Indian non-banking finance unit, which is struggling with bad loans and a top-management churn.

The fresh capital infusion in KKR India Financial Services Ltd will help the non-banking financial company enhance its position in the country’s structured credit segment, the PE firm said in a statement. This will also help the NBFC continue to provide Indian companies with long-term funds, it added.

News of the funding comes just days after VCCircle reported that a senior executive at KKR India Financial had resigned. There have been more resignations from the credit arm in recent months, including former CEO BV Krishnan and managing director Tashwinder Singh.

KKR had also hired Kapil Singhal from Edelweiss Group as a managing director to boost its credit team in October last year. Besides Singhal, KKR hired five more executives in its credit team in 2019.

KKR India Financial has also recorded a jump in bad loans, leading to a slump in profit and a rating downgrade by Crisil Ltd in October 2019. Gross non-performing assets climbed to 2.06% for 2018-19 from zero the year before, Crisil said. Its net profit slumped to about Rs 24 crore in 2018-19 from Rs 147 crore, according to its annual report.

The NBFC has so far deployed over $5 billion in credit investments across 150 deals in the past decade. It also offers alternative asset management and capital market services to Indian businesses.

Sanjay Nayar, who heads both the PE firm and the NBFC in India, said the country was an important part of the firm’s Asia growth strategy and that the additional investment was proof of its commitment to the region.

KKR co-presidents and co-chief operating officers Joe Bae and Scott Nuttall said this commitment shows the firm’s support to KKR India Financial. “Moreover, it solidifies KIFS’ financial position, allows KIFS to be proactive in a dislocated market, and reflects our confidence in KIFS and its mission to finance India’s homegrown champions.”

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