Apollo, ICICI Venture to launch non-banking finance company in India

The two private equity firms have also collaborated on a $750 million special situations fund in recent months. The NBFC would specialize in mezzanine financing, lending money for asset purchases through a combination of debt and equity components. Industry watchers note that there is increasing demand for these kinds of structured finance transactions in India.

It was reported earlier this month that private equity firms have invested $200 million in six Indian NBFCs since the start of the year. These investments are seen as attractive for several reasons: they fill a lending gap left by India's banks; investment in standard banks is capped at 5%; and the Reserve Bank of India has said that, by March next year, NBFCs must hold INR15 ($0.33) in capital for every INR100 ($2.25) they lend out, up from INR12 ($0.27), prompting an equity-raising drive. Furthermore, NBFCs must rely on financial institutions to raise money rather than use customers' deposits, and access to capital has been tightened in recent months.

However, regulators have indicated that they are keen to tighten their grip on the industry. The central bank has set up a committee to suggest new rules.

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• Topics
• Financials
• South Asia
• Apollo Global Management
• ICICI Venture Funds Management Company