ChrysCapital leads $149m round for India's Hero FinCorp

ChrysCapital led the investment, contributing INR5.7 billion; Credit Suisse invested INR1.3 billion, while Hero Group committed INR3 billion. The company will use the new capital to support its expansion. It hopes to take advantage of growing demand for credit services in India by entering new lending areas such as home loans, augmenting existing verticals, and partnering with financial technology start-ups to introduce new technology to its operations.

Hero FinCorp currently has about INR80 billion in loan assets, up from INR3 billion in 2013; it plans to reach INR350 billion by 2020. In addition, the company intends to reach 4,000 locations by 2020, up from 2,000 at present.

A subsidiary of automotive industry-focused Hero Group, the company has considerable interest in vehicle lending - part of the new capital will go toward strengthening its used car loan segment and opening a two-wheeler loan division - along with consumer loyalty loans and small and medium-sized enterprise (SME) financing. It provides financing to customers with limited credit histories that have trouble raising loans from banks.

"Hero FinCorp is an excellent platform with a combination of a great management team, technology, low cost of funds and a group with a long history of creating successful consumer businesses," said Sanjay Kukreja, a partner at ChrysCapital, in a statement. "ChrysCapital believes Hero FinCorp has all the ingredients to scale multifold and create significant shareholder value in the future."

NBFCs have assumed an increasingly important role in India's financial system in recent years; with the country's rapid growth leading banks to focus on lending to larger companies, SMEs have faced a shortage of credit opportunities, which NBFCs have stepped in to address. The institutions are also seen as avenues by which India's unbanked population can begin to access the traditional financial system.

ChrysCapital has invested and exited several Indian NBFCs, including Mahindra Finance and Shriram City Union Finance; it currently holds an interest in Au Financiers, in which it invested $22 million in 2013 and joined a $21 million round in 2014. The GP is currently raising its seventh India fund, which it launched last year with a target of $600 million. The fund reached a first close of nearly $350 million in January.

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• Topics
• South Asia
• Financials
• Expansion
• India
• ChrysCapital Management
• NBFCs
• Growth capital