Essel Finance Business Loans Ltd, the non-banking finance arm of Essel Finance Ltd, said on Tuesday it plans to acquire a part of Intec Capital Ltd’s loan portfolio and bank liability.
The lender will buy a loan portfolio of Rs 272 crore from Intec in exchange for an equity stake, Essel Finance said in a statement.
The statement didn’t specify the size of the stake. However, a report by the Press Trust of India said Intec’s shareholders will get a 17.5% stake in Essel Finance Business Loans as per the transaction.
Delhi-based Intec is backed by Motilal Oswal Private Equity. The private investment arm of Motilal Oswal Financial Services Ltd owns a 33% stake in Intec through two funds.
A person close to the development told VCCircle the transaction will provide an exit route to Motilal Oswal PE, which had invested about Rs 65 crore in Intec in two tranches.
Intec Capital, set up in 1994, provides loans for buying machinery and other business purposes. The company had told stock exchanges in June that it had signed a business transfer agreement with Essel Finance for a loan portfolio. Its total loan book was Rs 675 crore as of March 2017.
Motilal Oswal PE had first invested around Rs 37.3 crore in Intec in March 2013 through compulsorily convertible preference shares and equity shares. It increased its stake in the lender a year later.
Email queries sent to Essel Finance and the PE firm late in the evening didn’t receive any response till the time of filing this article.
Amitabh Chaturvedi, managing director at Essel Finance, said in the statement that the deal will increase the company’s loan to Rs 500 crore and provide it with a large pan-India customer base.
Subhash Chandra-promoted Essel Group—which has interests in media, industrial manufacturing, education and infrastructure—is aiming to become a financial services conglomerate, Chaturvedi told VCCircle in November last year.
Essel Finance offers financial services and products such as SME business loans through its non-banking financial arm, housing finance, forex, private equity and investment banking, among others.