Brookfield buys into Everstone’s India NBFC
Brookfield Asset Management has offered to buy up to 40% of IndoStar Capital, an Indian non-banking financial company (NBFC) established by Everstone Group, for INR14.5 billion ($202 million).
Formed in 2011 by Everstone alongside Goldman Sachs and Ashmore Group, IndoStar offers corporate lending, small and medium-sized enterprise (SME) loans, housing loans and commercial vehicle financing. It claims to serve more than 60,000 customers nationwide.
Everstone announced that Brookfield Business Services, a division of the Canadian asset manager, will subscribe to INR12.25 billion ($170 million) in new stock and pay INR2.25 billion ($32 million) for shares held by existing investors, according to a statement. Shareholder approval for the plan will be sought next month.
Everstone and its partners currently own 60.74% of the NBFC through a Mauritius-based holding vehicle that will remain a co-promoter and active shareholder. At the completion of the share sale, the company is expected to be valued at INR36.25 billion ($510 million).
“We believe in the long-term secular growth runway of the Indian retail financial services sector. IndoStar has an experienced management team and a strong position in attractive and growing retail lending segments,” said Aditya Joshi, a senior vice president at Brookfield Business Partners.
Vehicle finance and corporate lending comprise 77% of IndoStar’s outstanding loan book. The firm has been working to move away from infrastructure and business finance, which are still reeling from liquidity issues. In 2019, it acquired rival NBFC IIFL Holdings' customer vehicle financing unit, which prompted the share of retail-focused assets to jump from 27% to 61% over the previous financial year.
Everstone launched IndoStar in 2011 to fill a credit gap it saw in the non-banking finance segment as a result of the global financial crisis. It took the firm public in 2018. Brookfield's India portfolio is chiefly infrastructure and real estate, including toll roads, office parks, and construction and real estate management entities.
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