Priyanka Tiwari
Share
As reported by Moneycontrol, the Hyderabad based non banking financial company, IKF Finance is in a contract to obtain $70 to $80 million in fresh primary equity from a sovereign wealth fund and Norwest Venture Partners, who are likely to participate as well.
As one of the sources mentioned, the deal, that requires the approval of the Reserve Bank of India now is in its final stages. It consists of both a primary infusement of capital and secondary selling of stakes.
According to another source, the deal is closed and a 26 percent stake is actively being fiendished for along with the approval of the RBI. This might result in the possible selling of a partial stake by existing investors.
Proportionate to the shareholding changes, NABFC holds a compliance above twenty-six percent regulatory approval with the Indian bank.
Though the estimation of primary capital infusion hovers around 70-80 million, the sources believe the total transaction alongside secondary sales will be significantly larger. This milestone would advance IKF Finance to the prospective stages of growth as well.
The recently NBFC amendment under Memorandum and Articles of Association passed under Motilal Oswal Alternatives Oswal Accion enabled the firm to increase its share capital. Sources suggest the fundraising plans might be the reason behind this recess.
Documents examined by Moneycontrol suggest that the rise in issued and paid-up share capital is being done “keeping in mind the intended primary funding from the identified investors.” Moneycontrol, in an attempt to seek clarification, has sent emails to IKF Finance and Norwest Venture Partners but is yet to receive a reply. This will be one of the biggest fundraisings for IKF finance. They raised the aforementioned amounts in the previous rounds from TIAA and Accion and domestic High Networth Individuals. Most of the assets under management (AUM) of the company relates to the region of Andhra Pradesh and Telangana, which is nearly 70% of their AUM. The firm is now actively seeking to grow outside its core markets. In FY24, it expanded its footprint into Odisha taking the total number of states where it operates to nine including Gujarat, Maharashtra, Madhya Pradesh, and Rajasthan along with Karnataka, Tamil Nadu, and the well known Marathi state. It increased its branch network in FY24 from 134 to 165 and by September 2024 had 179 branches according to the Care ratings. Behind IKF Finance IKF Finance has a legacy of more than three decades dating back to 1986 when VGK Prasad registered the firm under the name IndraKeela Financiers Private Limited.
During the past few years, Vasantha assumed leadership of the housing subsidiary of IKF Home Finance. She now leads IKF Home Finance, which is a subsidiary of housing finance. His younger daughter, Vasantha, now leads IKF Home Finance, its housing finance subsidiary.
In 2007, Prasad's elder daughter K. Vasumathi Devi took over leadership and was elevated as managing director in 2022. He delisted from the Bombay Stock Exchange, as well as from the Ahmedabad Stock Exchange, and then traded as a public limited company in 2015. As of September 30 2024, promoters held 42.84 percent of the company, while funds managed by Motilal Oswal Private Equity, along with Accion Digital Transformation Fund, together owned 29.72 percent. TIAA held 7.96 percent, while the remainder was divided amongst other investors.
Over the last three years, Care Ratings data shows that IKF Finance's AUM has grown with a compound annual growth rate (CAGR) of 39%, rising from Rs 1,777 crore in March 2021 to Rs 4,811 crore in March 2024. It operates primarily in two core segments: The first is lending against industrial and SMEs real estate. The second is Used Vehicle Financing and Senior Secured Commercial Loan for Non-Bank Financial Companies.
From the previous estimate, there has been a year-on-year growth of 53 percent which as of September 30, 2024 stands at Rs 5,386 crores.
During FY24, the loans disbursed amounted to Rs 3,145 crores which is 53 crores funded in FY23. The company posted a profit after tax of Rs 102 crores against total revenue earning of Rs 586 crores which indicates y-o-y growth of 64 percent and 55 percent respectively.
Rising cost of funds which is 9.48 percent in FY24 combined with higher write offs amounting to Rs 10.41 crores put some pressure on its margins. As of September 2024, the company reported gross NPA of 2.25 percent and a net NPA of 1.75 percent.
Large cheques continue flowing in despite roadblocks for NBFCs
There are still difficulties within the NBFC space, but there is still a strong investor interest especially regarding MSME and supply chain financing. A few large rounds of funding have been completed in FY25 which indicates positivity in the space.
Avataar Ventures, Sofina and Madison India Capital led a $135 million funding round for Jaipur based NBFC Finova Capital, with participation from Norwest.
Around the world, supply chain finance NBFC Mintifi raised $180 million over a series of rounds, with Ontario Teachers Investments, Prosus Ventures, and Premji Invest participating.
The rural lender SarvaGram raises $68 million in series D rounds, while MSME focused fintech lender FlexiLoans picked up $34.5 million in Series C from Accion, Nuveen, and Fundamentum.
Moneycontrol first broke the news on the three deals mentioned above.
Aye Finance is planning an IPO of $1.450 crores which Moneycontrol reported in December alongside Elevation Capital and Alphabet.
Read More: Swiggy Instamart Expands to 100 Cities in India Amid Rising Demand
