Warburg Pincus, IFC commit $50m to Au Financiers
Warburg Pincus and International Finance Corp. (IFC) have jointly invested $50 million in Au Financiers, an Indian non-banking finance company. IFC’s participation means its stake in the company will remain the same, while Motilal Oswal Private Equity, one of the other early investors in the company, is making a partial exit.
Reports of the deal first emerged last month. Prior to that, The Carlyle Group and Warbug Pincus were both said to be in talks with the company about further funding. Jaipur-based Au Financiers is majority-owned by private equity investors. Motilal Oswal committed INR200 million ($4 million) in the first round of funding in 2008. It also participated in a second round in 2010, injecting INR600 million with IFC and other backers.
Au Financiers, which will use the latest round of capital to fund its future growth, is primarily involved in providing loans or commercial vehicles and financing for small- and medium-sized enterprises. It also recently entered the housing finance market.
The company has about 150 branches across seven states in western and central India and serves over 125,000 borrowers. Assets under management have doubled over the past year.
"The current round led by Warburg Pincus is the single largest equity infusion in the company, which would double our net worth. With the support from our well-reputed investors we are confident that we will continue to grow in an accelerated manner and take our business to a different level of size and scale," said Sanjay Agarwal, managing director and founder of Au Financiers.
Ernst & Young and Wadia Ghandy advised Au Financiers on the transaction, while Amarchand Mangaldas and KPMG worked with Warburg Pincus.
The NBFC space is popular among private equity investors, largely for the flexible, rupee-denominated financing options they provide to entrepreneurs who aren't necessarily comfortable selling equity stakes.
KKR set up its own NBFC in 2009, while Goldman Sachs Private Equity, Ashmore Group and Everstone Capital teamed up to create Indostar Capital Finance. It has also been reported that Apollo Global Management and ICICI Venture will launch a joint venture NBFC that will specialize in mezzanine financing, lending money for asset purchases through a combination of debt and equity components.
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