Multi-stage private investment firm Norwest Venture Partners has led a $32 million (Rs 200 crore) funding round in Ess Kay Fincorp Ltd, the non-banking finance company said on Wednesday.
About half of this amount constituted primary infusion into the lender and the remaining went to private equity investor BanyanTree Growth Capital, which fully exited the company, Ess Kay said in a statement.
Norwest invested Rs 108 crore while Baring Private Equity India and Evolvence India put in the remaining amount, Ess Kay chief financial officer Atul Arora said in the statement.
BanyanTree, which had invested Rs 18 crore in 2012 and had a 25% stake in Ess Kay Fincorp, walked away with a return of more than five times its initial investment.
Promoted by Rajendra Setia, Jaipur-based Ess Kay Fincorp plans to invest the fresh funds to deepen its presence in existing locations and spreading its footprint to new regions.
The company primarily helps customers in rural and semi-urban India buy used vehicles and run small and medium enterprises (SMEs). The average ticket size for vehicles is Rs 3 lakh over an average tenure of three years, and Rs 7 lakh for five-year SME loans.
The firm operates through a network of 240 branches in six states across northern and western India, with more than 75,000 customers and a loan book of more than Rs 1,100 crore.
Arora said the company is looking to expand in Madhya Pradesh, Maharashtra, Punjab and Haryana after scaling up in Gujarat last year. It also wants to more than double its loan book in a little more than a year's time.
“The company is aiming at a loan book of Rs 6,000 crore by 2022, and Rs 2,500 crore by March 2019,” he added.
Niren Shah, managing director of Norwest Venture Partners India, said the investment in Ess Kay Fincorp was driven by the NBFC’s focus on the semi-urban market for vehicle and small enterprise finance where it has a track record of fast growth coupled with robust credit.
“With this growth equity round, Ess Kay Fincorp is well positioned to leverage its strong franchise, excellent core team, distribution and large market opportunity to drive exponential growth,” Shah said.
Norwest is known for actively backing financial services firms including Shriram City Union Finance and Yes Bank. The investment in Ess Kay Fincorp represents its ninth growth equity deal in financial services.
Last year, the private equity firm made full exits from three financial services firms with above-benchmark returns.
The most recent exit was from Cholamandalam Investment & Finance Co. Ltd, where it made a four-fold return on its investment including dividends. Earlier in the year, it had exited from RBL Bank and IndusInd Bank Ltd.
Baring Private Equity Partners India, one of the oldest private equity funds in the country, has investments in listed companies including Muthoot Finance and Manappuram Finance.
Evolvence, a hybrid private equity platform for India with a strategy to invest in SMEs, has made 15 co-investments in the country, the statement from Ess Kay Fincorp said.
Its most recent investment in a financial services firm was in microlender Suryoday Small Finance Bank Ltd.