Lone Star, India’s Rattan to launch NBFC
Lone Star Funds and the RattanIndia Group will jointly invest INR26 billion ($400 million) to launch a new non-banking financial company (NBFC).
The entity, RattanIndia Finance, will be owned equally by the two investors. Rajiv Rattan, currently chairman of RattanIndia, will become chairman and CEO of RattanIndia Finance. According to a statement, the necessary regulatory approvals have already been obtained and offices have been opened in Delhi and Mumbai. The NBFC will focus on providing credit to Indian companies that have trouble obtaining financing from traditional banks.
Lone Star joins several other foreign investors that have established their own NBFCs in India rather than investing in an existing institution. KKR has two NBFCs – KKR India Financial Services and a real estate-focused company co-sponsored by Singapore’s GIC Private and The Townsend Group – and pan-Asian special situations investor Clearwater Capital Partners founded Altico Capital India in 2004 to finance real estate projects.
Everstone Capital has also taken this route, founding Indostar Capital Finance (ICF) in 2011 with support from CDIB Capital and Beacon Private Equity. The NBFC, which focuses on providing structured financing solutions to Indian corporate customers and small and medium-sized enterprises, filed for an IPO earlier this year that will provide exits for Everstone, CDIB, and Beacon.
“The capital strength of RattanIndia Finance will immediately make it a key lending platform for companies and small-to-medium sized businesses that seek access to capital. RattanIndia Finance will also focus on steadily building a retail platform that extends across India,” said Rajiv Rattan. “Our team is committed to building an institution that strengthens our communities and enables people and businesses to realize their growth potential.”
Lone Star’s partnership with RattanIndia follows last year’s launch of a fund, alongside Infrastructure Leasing & Financial Services (IL&FS), to invest in distressed infrastructure. The $550 million vehicle will buy underperforming assets held by other GPs, asset reconstruction companies, and banks, aiming to help investors recycle capital and reinvest in new projects.
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