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PE-backed Ess Kay Fincorp to raise $40 mn in debt funding from FMO
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Non-banking finance company Ess Kay Fincorp Ltd is set to raise $40 million (Rs 283.21 crore at current exchange rates) in debt funding from FMO, the Netherlands’ development finance company.

FMO said in a disclosure that Ess Kay would use the capital to enable its borrowers to buy and convert gasoline- and diesel-powered cars into compressed natural gas (CNG) vehicles.

FMO said the funding would help grow the CNG portfolio of Ess Kay, which primarily helps customers in rural and semi-urban India buy used vehicles and run small and medium-sized enterprises.

The funding would also promote cleaner technologies and improve air quality in India, FMO said. Besides, it would help FMO achieve its goal of servicing underserved entrepreneurs as Ess Kay targets first-time borrowers.

Promoted by Rajendra Kumar Setia, the Jaipur-based Ess Kay Fincorp operates through a network of 300 branches in six states across northern and western India, with more than 2.25 lakh customers.

The average ticket size for vehicle financing is Rs 3 lakh over an average tenure of three years, and Rs 7 lakh for five-year SME loans.

Setia is Ess Kay’s largest shareholder, holding 44% of the company. Other shareholders include Norwest Venture Partners with 24%, TPG Growth with 13%, the Baring Private Equity India with 9, and Evolvence CoInvest holding 8% of the company, according to the disclosure.

In January last year, Norwest led a $32 million (around Rs 200 crore) funding round in Ess Kay. 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. Norwest invested Rs 108 crore while Baring Private Equity India with 9%, and Evolvence India put in the remaining amount.

FMO

The Dutch development bank finances projects through equity and debt instruments in sectors such as agri-business, food and water, energy and financial institutions in underserved regions.

It is also an active investor in India. Last month, it proposed a €7.50 million ($8.29 million, or Rs 59.62 crore) investment in Sahyadri Farmers Producer Co. Ltd. FMO said the proposed investment will help Sahyadri finance the construction of collection centres for the warehousing and transport of produce.

In the same month, it proposed a $42 million (around Rs 290 crore) investment in social-impact investor and asset manager Aavishkaar Venture Management Services Pvt. Ltd. Its other investments include a debt investment of $30 million (Rs 209 crore) in Kolkata-based Srei Equipment Finance Ltd, and Nomisma Mobile Solutions Pvt. Ltd., which owns digital payments and loans platform Ftcash.

In August, it also proposed a $15 million (about Rs 107 crore) investment in the third fund of mid-market private equity firm BanyanTree. The PE firm is likely to close the third fund at $100-125 million, FMO said.

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