Apax invests $83.2m in India NBFC Cholamandalam

According to a stock market disclosure, the GP will subscribe to 50 million compulsorily convertible preference shares (CCPS) at a face value of INR100 per share. The CCPS will convert to equity shares at INR407 each, translating into an issue of 12.2 million shares - or 8%. The CCPS will bear a dividend coupon of 1% per cent per annum.

CIF has already has a number of PE backers. In February, the International Finance Corporation (IFC) has made a partial exit from the company, selling 2.96 million shares to WestBridge Capital at INR287 apiece. IFC had invested INR1 billion in CIF in April 2010, taking a 9.5% stake, AVCJ Research's records show. Five months later it put in another $3.24 million as part of a joint deal with Amansa Capital and Aquarius Investment Advisors, worth $23.19 million in total.

Earlier this year IFC committed INR3.15 billion in debt financing to CIF by subscribing to unsecured non-convertible debentures intended to help the NBFC scale up its operations in several low-income states and reduce reliance on bank borrowings. Other backers include Creador and Multiples Alternative Asset Management, which invested $39.9 million between them in late 2011.

CIF - a financial services arm of Murugappa Group - primarily focuses in the rural and semi-urban sector with core business segments covering vehicle finance, home equity loans, corporate finance, stock broking and distribution of financial products. It has more than 500 branches in 22 Indian states, including nine low-income states, and a loan portfolio of around INR220 billion. The NBFC will use the funds towards augmenting its capital base for future growth and strengthen the tier-1 capital adequacy ratio.

"We believe in the long-term secular growth runway of Indian retail financial services and Cholamandalam is well positioned in this space, with an outstanding management team and exposure to attractive lending segments," said Shashank Singh, managing director and head of Apax's India office.

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• Topics
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