Warburg Pincus to buy majority stake in India's Vistaar Finance
Warburg Pincus has agreed to acquire a majority stake in Vistaar Finance, an India-based non-banking financial company (NBFC) that serves micro, small, and medium-sized enterprises (MSMEs).
The size of the transaction was not disclosed. It will facilitate exits for WestBridge Capital, Elevar Equity, Omidyar Network India, and Saama Capital. Vistaar raised approximately USD 75m across four funding rounds between 2010 and 2015, AVCJ Research’s records show. Elevar Equity and SVB India – since rebranded as InnoVen Capital – were the earliest investors.
Dutch development finance institution FMO has also provided several tranches of funding, initially in the form of non-convertible debentures and most recently through a USD 30m bridge loan in 2020.
Vistaar was established in 2010 in Bengaluru to serve India’s rural and semi-urban markets. It now has 205 branches across 12 states and claims INR 26bn (USD 315.3m) in assets under management. It provides 100% secured business and housing loans, targeting small-scale shops and factories, power looms, kirana, and home-based industries that don’t have access to mainstream funding.
As of March 2022, it had disbursed loans amounting to INR 56.4bn, serving 240,000 entrepreneurs and – directly and indirectly – creating 70,000 jobs. The loan portfolio was worth INR 23.3bn. Loans tend to be in the INR 100,000 to INR 500,000 range, with a duration of 24-180 months, and monthly repayments. They are usually secured against property.
Two-thirds of Vistaar’s funding needs are met by more than two dozen of India’s leading banks, with domestic financial institutions such as Tata Capital, Bajaj Finserv, and Sundaram Finance contributing another 21%. The rest comes from FMO.
Revenue for the 12 months ended March 2022 was INR 4.3bn, up from INR 3.6bn a year earlier. Net profit rose from INR 647.6m to INR 741.9m.
“We believe micro-enterprises in semi-urban and rural India are underserved by formal sources of credit and we believe Vistaar has the potential to fulfil that need gap and be a driver for broad-based growth on those regions and communities,” said Narendra Ostawal, a managing director at Warburg Pincus, in a statement.
Kotak Investment Banking served as the exclusive financial advisor on the transaction.
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