PE firms target Indian non-banking financial companies

Munish Dayal, partner at Baring Private Equity Partners India, said that the firm is still looking for NBFC investment opportunities, adding that a number of companies will need Series B funding in the next two to three years.

NBFCs are seen as attractive for several reasons: they fill a lending gap left by India's banks; investment in standard banks is capped at 5%; and the Reserve Bank of India has said that, by March next year, NBFCs must hold INR15 ($0.33) in capital for every INR100 ($2.25) they lend out, up from INR12 ($0.27), prompting an equity-raising drive. Furthermore, NBFCs must rely on financial institutions to raise money rather than use customers' deposits, and access to capital has been tightened in recent months.

According to Dayal, retail asset-backed NBFCs such Magma Fincorp, Shriram Transport Finance and Manappuram General Finance and Leasing are more financially inclusive and cater to a population that doesn't have access to banks.

The private equity arm of Goldman Sachs, Ashmore Group and Everstone Capital have even gone to the effort of creating their own NBFC, which is known as Indostar Capital Finance.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Financials
• Baring Private Equity Partners India
• Goldman Sachs
• Everstone Capital