ChrysCapital buys 10% stake in NBFC Au Financiers
ChrysCapital Partners has purchased a 10% stake in Indian non-banking financial company Au Financiers for INR1.2 billion ($22.2 million). The investment facilitates another partial exit for Motilal Oswal Private Equity, which sold a portion of its holding last March when Warburg Pincus and International Finance Corporation (IFC) committed $50 million to the company.
Sanjay Agarwal, managing director and founder of Au Financiers, confirmed ChrysCapital's investment to The Economic Times. It values the company at INR12 billion, 50% more than when Warburg Pincus and IFC came on board.
Jaipur-based Au Financiers is majority-owned by private equity investors. Motilal Oswal committed INR200 million in the first round of funding in 2008. The PE firm also participated in a second round in 2010, injecting INR600 million with IFC and other backers to take its overall holding to 35%.
Warburg Pincus and IFC took stakes in Au Financiers of 26% and 18%, respectively, buying a combination of new shares and secondary shares offloaded by existing investors. In the most recent round, ChrysCapital has bought 7% of the company from Motilal Oswal - reducing the PE firm's interest to 12% - and 3% from the Agarwal family. Au Financiers' promoters now own 35%.
Au Financiers is primarily involved in providing loans or commercial vehicles and financing for small- and medium-sized enterprises. In the last year it has also entered the housing finance market. The company has about 150 branches across seven states in western and central India and serves over 125,000 borrowers.
Agarwal said that Au Financiers is likely to post a net profit of INR900 million for the current financial year, with total assets of INR13 billion.
The non-banking financial company (NBFC) space is popular among private equity investors, largely for the flexible, rupee-denominated financing options they provide to entrepreneurs who aren't necessarily comfortable selling equity stakes.
KKR set up its own NBFC in 2009, while Goldman Sachs Private Equity, Ashmore Group and Everstone Capital teamed up to create Indostar Capital Finance. Last year, Warburg Pincus acquired a 68.3% stake in Future Capital from Pantaloon Retail across two transactions for INR7.4 billion.
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