Warburg-backed Capital First to buy minority stake in Village Financial
Photo Credit: Shah Junaid/VCCircle

Non-banking financial company Capital First Ltd, part-owned by US private equity firm Warburg Pincus, has agreed to buy a 7.03% stake in Village Financial Services Ltd.

Capital First said in a stock-exchange filing that it will buy 3.1 million shares of the Kolkata-based microlender at Rs 48 apiece, for a total of Rs 15 crore ($2.2 million).

The purchase will enable a business tie-up with Village Financial, Capital First said. The transaction is likely to be completed within a fortnight, it added.

Village Financial was incorporated in 1994. It posted revenue of Rs 113.88 crore for the year through March 2018, up from Rs 77.97 crore the year before.

This is Capital First's second investment in a lending company within a month. Last month, it had bought a 14.24% stake in digital lender SMEcorner for Rs 12 crore ($1.7 million).

Last year, Capital First had bought a 10% stake in fin-tech startup Sienna Systems Resources Pvt. Ltd.

The acquisitions are part of Capital First's efforts to diversify its loan book by shifting focus from wholesale lending to retail loans.

Capital First is backed by Singapore sovereign wealth fund GIC, apart from Warburg Pincus.

In January, IDFC Bank had agreed to acquire Capital First in a share-swap deal valued at about $1.5 billion. The Reserve Bank of India approved the merger last month.

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