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Motilal Oswal Alternates, TPG, others bet $160 mn on SK Finance

By Malvika Maloo

  • 23 Jan 2024
Motilal Oswal Alternates, TPG, others bet $160 mn on SK Finance
Rajendra Kumar Setia, founder and MD, SK Finance | Credit: SK Finance

Non-banking lender SK Finance said Tuesday it has concluded a new funding round worth Rs 1,328 crore ($160 million) from a bunch of new investors such as Motilal Oswal Alternates and existing backers including TPG Growth. 

The round was a combination of primary capital infusion into SK Finance and secondary transactions involving some investors, the lender said in a statement. It didn’t give a breakup of the primary and secondary components. 

Existing investors Norwest Venture Partners, TPG Growth and Baring Private Equity India as well as new investors Motilal Oswal Alternates, Duro Capital, Axis Alternatives, Ananta Capital and Mirae Asset Venture Investments took part in the round. 

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Motilal Oswal Alternates, the private equity arm of Mumbai-based Motilal Oswal Group, put in Rs 415 crore in the round.  

The announcement comes almost six months after VCCircle reported last year that Motilal Oswal Alternates was close to investing in SK Finance. VCCircle also reported in October last year that venture capital and growth equity investor Norwest Venture Partners and private equity firm TPG Growth would top up their investments in the company. The report mentioned Baring PE India, Axis and Mirae Asset as the other investors. 

The Jaipur, Rajasthan-based shadow lender that finances small businesses and the purchase of pre-owned vehicles will use the capital to grow its brand, distribution, technology and team.  

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“The investments from our existing investors and our new investors fortifies the conviction placed by them on our business model and our team,” said Rajendra Kumar Setia, managing director and CEO of SK Finance, in a statement.  

“This primary capital infusion will help accelerate our growth through proposed investments in brand, distribution, technology and people,” he added.  

The fundraising comes about two years after SK Finance, previously known as Ess Kay Finance Ltd, raised Rs 400 crore in a Series F round from IIFL Wealth and other investors. At the time, the company said its total fundraising increased to Rs 1,400 crore with the Series F round. 

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“The used vehicle financing space is significantly underpenetrated, and SK Finance’s customer connect and continuing focus on granular ticket size products has led to a learning curve and scale benefits,” said Vinit Mehta, managing director and Head of BFSI at MO Alts.  

Norwest first invested in SK Finance in 2017 and then put in more money in 2018, 2019 and 2021. TPG joined SK Finance’s cap table in 2018 and joined the next two funding rounds. 

“This marks our fourth investment in the company and we are excited to continue our partnership towards the next stage of growth. In addition to developing a robust operational model, the company’s tech supported business has delivered improved efficiencies,” said Simit Batra, Principal, TPG Growth.  

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SK Finance was incorporated in 1994, and primarily finances used light commercial vehicles, multi-utility vehicles, cars, tractors and two-wheelers. It also advances loans to small and medium-sized enterprises. It has presence across 12 states and union territories through its network of about 500 branches and over 9,600 employees as of September 2023.  

The company reported a profit after tax of Rs 222.8 crore for the year ended March 31, 2023, compared with Rs 142.9 crore the year before, its annual report shows. Total revenue from operations jumped to Rs 1,302.8 crore from Rs 814.4 crore.

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