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KKR, IFC invest in Indian SME lender

  • Maya Ando
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KKR and the International Finance Corporation (IFC) are reportedly set to acquire a 14.9% and a 12% stake, respectively, in Magma Fincorp, a Kolkata-based lender for trucks and farm equipment, via the issuance of new new shares. The transaction is valued at INR4,400 million ($96.9 million).

Ernst & Young (Advisory) and Wadia Ghandy advised Magma on the transaction, while KKR appointed Ernst & Young (Transaction Advisory), McKinsey & Co., Simpson Thacher & Bartlett, AZB Partners and Kotak Mahindra as arrangers.

Founded in 1992, Magma deals in the financing of utility and commercial vehicles and cars, construction equipment, tractors and SME loans. It has 171 branches in 20 states across India, and the new capital will be used to support company’s growth plans in both existing businesses and new areas, the company noted in a release.

"This is a long term investment in Magma, a company led by enterprising promoters who have built an impressive platform of sound risk management and credit underwriting capabilities”, said Sanjay Nayar, Head of KKR India, adding that the promotion of consumer credit, agri-lending and corporate lending to SMEs will benefit the economic growth and stability of Indians living in rural and semi-urban areas.

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