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PE funds backed NBFCs Magma Fincorp Limited and Au Financiers (India) are planning to raise around $65 million from the International Finance Corporation. Both the NBFCs will raise the money through Non-Convertible Debentures (NCD). IFC's debt support to these companies would attract other FIIs as takers of its corporate debt.
Magma Fincorp to raise $35 million
IFC's proposed investment in Magma Fincorp Limited (Magma), one of the top 20 NBFCs in India, of up to Rs 215 crore (around $35 million equivalent) through the subscription of its Tier II Subordinated Unsecured Non-Convertible Debentures. The project is intended to provide support to the company by strengthening its capital base and by helping it grow its asset base in the next few years, said IFC.
The Company plans to utilise the funds raised through issuance of NCDs to augment its capital adequacy, continue to focus on penetration in low income states, especially targeting customers with lower incomes by financing smaller assets with smaller ticket sizes.
Magma’s sponsors include Mayank Podar (Chairman) and Sanjay Chamria (Vice chairman and MD), who co-founded the company in 1988. Over a period of time the company has raised several rounds of equity reducing the stake of the promoters in the company. IFC currently has a 12.10 per cent stake in the company. Other major shareholders include KKR 16.06%), ChrysCapital (8.40%) and India Capital Fund (5.12%)
The NBFC currently has presence across 21 states in the country, with total of 280 branches primarily targeting the semi-urban and rural markets. Magma has a portfolio volume of Rs 172.2 billion ($2.8 billion) as of December 31, 2013.
Magma is headquartered in Kolkata and has 280 branches pan India as of December 31, 2013.
Au Financiers
Warburg Pincus, Motilal Oswal Private Equity and Chrys Capital, backed non-banking finance company Au Financiers (India) Ltd planning to raise around $30 million from its existing investor International Finance Corporation (IFC). The fund raising will be through Non-Convertible Debentures (NCD).
Promoted by Sanjay Agarwal a Chartered Accountant by profession and a first generation entrepreneur, Au Financiers provides loans to low-income, self-employed, first-time and small transport entrepreneurs in semi-urban and rural Rajasthan and other Indian states like Maharashtra, Gujarat, Madhya Pradesh, Punjab, Goa, Chattisgarh and Delhi. Other shareholders in Au Financiers include IFC, Warburg Pincus, MotilalOswal Private Equity and Chrys Capital.
The investment is expected to reach additional low income customers between FY14-17 and will help funding requirements of the NBFC from a diversified source. Besides, IFC's debt support will help the Company attract other FIIs as takers of its corporate debt, said IFC.
Au Financier is focused on personal and commercial vehicle financing which represents roughly 80 per cent of the portfolio, followed by small business financing to micro and small manufacturers, tiny units and agri based small businesses aggregating 20 per cent. Housing finance is undertaken by its subsidiary, and the financing is for house purchase, construction and repair. Overall, the existing lending portfolio present potentially limited adverse environmental or social risks or impacts that will be few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.
