InCred to raise $150 million for expansion plan

One of the four people said the company is seeking a valuation of $750-800 million for the funding round, in which “both new and existing investors will participate”.

“Investment bank Avendus is helping the firm find investors. They are in early talks with a Canadian pension fund and some sovereign wealth funds and family offices from the Middle East,” said a second person, who asked not to be named. Talked on the condition of

Incred Group counts Investcorp, Oakes, Moore Capital, Elever Equity and Paragon Partners as investors. The Mumbai-based financial services firm is also backed by former Deutsche Bank chief Anshu Jain, Manipal Group chairman Ranjan Pai and Gaurav Dalmiya, founder chairman of Landmark Holdings (Dalmia Group), among others.

“While Incred Finance has been growing at a very steady pace, we are currently leveraged and hence, the existing capital base can comfortably support our growth. Our debt-to-equity ratio is also comfortably at 1.5/1… We will be happy to share the statement with the media whenever there is a need to formally raise equity,” said Incred Finance, the NBFC arm of Incred Group. A spokesperson said in response to questions.

“While talks are on mainly for a primary fundraising, there could be a second part where some of the existing investors will sell partial stake. The final contours of the round are yet to be worked out,” said a third person cited above. “The firm is targeting to complete the round by the September quarter,” he said.

Founded in 2016 by Bhupinder Singh, Incred Finance is a new age lender that provides online and offline loans to consumer, small businesses and education. The non-banking financial company (NBFC) is set to merge with KKR India Financial Services Ltd in 2021 in an all-stock deal that was completed last year. According to a joint statement of the companies, the merger will create an NBFC with $600 million (approx). 4,700-crore) balance sheet and an equity base of $300 million.

The fourth person said the business has seen a boom and now with the merger, the books are integrated, and the company is targeting its next phase of growth.

While capital adequacy of NBFCs remains strong, credit growth through NBFCs has seen a pick-up in the past quarters. Under the terms of the merger, KKR, along with two other investors, Teachers Retirement System of Texas and Abu Dhabi Investment Authority, hold a 35% stake in the merged entity. KKR alone has 15-16 per cent stake in the consortium. InCred Finance is a strategic investment for KKR and not a portfolio company.

“A shift in the sectoral distribution of credit has been observed with a shift towards retail and a decline in industry… At the end of H1FY23 (April to September), total credit extended by NBFCs grew by 13.1% and stood at 31.5 trillion,” according to a report by CareAge Ratings (Care Ratings Ltd.). Over 9,000 NBFCs are registered with the Reserve Bank of India. Shadow banks, as NBFCs are often referred to, are also the largest net borrowers in the financial system. Huh.