Parry Singh-led Red Fort Capital, which specializes in disbursing loans to micro, small, and medium enterprises (MSMEs), has secured debt funding from two entities in a bid to boost its lending operations.
Red Fort Capital has secured term loans of Rs 7.5 crore from Chennai-based IKF Finance and Rs 4 crore from Usha Financial Services, the Mumbai-headquartered non-banking finance company said in a statement on Wednesday.
This debt funding will boost its assets under management (AUM) to reach Rs 175 crore by the end of the current financial year. In an interaction with VCCircle in April, Singh had said the firm aimed to grow its loan book to almost Rs 200 crore by the end of FY24 from about Rs 80 crore at the time.
Red Fort Capital, which lends in the Rs 1-10 crore range, also has plans to launch a debt fund which would invest alongside the NBFC’s operations, Singh had said earlier. The fund would be managed by the NBFC and the corpus would be small initially, he had said, without sharing the probable size of the vehicle.
Singh ran one of India’s top real estate-focused private equity funds a decade ago before splitting with his business partner and relaunching Red Fort as a non-banking finance company.
The Red Fort Capital group was founded in 2005 and started as a private equity investor focused on the real estate sector. It struck around 30 deals and managed a portfolio of $1.2 billion at its peak. The PE firm raised two funds—$375 million for its first vehicle and $500 million in its second outing. The firm had planned its third fund in 2015, but that did not see the light of day as Singh split with his business partner Subhash Bedi.
Red Fort had originally set up an NBFC in 2011. It made a handful of investments until 2015. As part of the split with Bedi, the shareholding of the NBFC was divided between Singh and a few other parties. Singh bought out all other parties in 2017 and restarted the NBFC business.
According to a report published by Avendus Capital, NBFCs that provide small-ticket loans to MSMEs are expected to record a deal flow of more than $15 billion in the next decade on the back of regulatory tailwinds, technology and maturing balance sheets. This would be an increase of 10 times from an equity deal flow of about $1.5 billion over the last decade, the report said.
Last month, another debt financier, Indifi Technologies Pvt Ltd, reported a jump in its AUM to over Rs 1,500 crore in FY23. Indifi expects a two-fold growth in its AUM during the current fiscal year.