Morgan Stanley PE leads funding round in Jaipur-based lender Kogta

Jaipur-based Kogta Financial (India) Ltd has raised Rs 154 crore ($22 million) in a funding round led by Morgan Stanley Private Equity Asia.

Kogta offers financing for commercial vehicles, tractors and cars, besides small-ticket loans against property to micro, small and medium enterprises.

Morgan Stanley Private Equity Asia had earlier invested in lenders Janalakshmi Financial Services (now Jana Small Finance Bank) and Five Star Business Finance.

In the current transaction, Morgan Stanley Private Equity Asia invested Rs 114 crore for a minority stake, while IIFL Seed Ventures pumped Rs 40 crore into the company, taking the total deal value to Rs 154 crore ($22 million).

IIFL Seed Ventures had earlier invested an undisclosed sum in the company in 2016.  

Kogta will use the current proceeds to expand its operations and enter new geographies.

“With this investment from Morgan Stanley and IIFL Seed Ventures, the company’s net worth will increase to more than thrice the current value,” said Varun Kogta, chief financial officer of Kogta.

Investment bank Equirus Capital acted as the financial adviser to Kogta on this transaction.

Kogta operates in Delhi, Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh through 80 branches.

As on 30 September, the company had a loan book of around Rs 530 crore.

Morgan Stanley

The Wall Street firm established its private equity business in India in 2008. However, it burnt its fingers with its first investment as the founders of castor oil manufacturer Biotor Industries were booked for fraud.

In June 2014, Morgan Stanley’s then managing director Aluri Srinivasa Rao had told VCCircle that the firm had made a soft commitment of $250-300 million for India .

In July 2018, Morgan Stanley Private Equity Asia, along with private equity firm BanyanTree, had invested $75 million (around Rs 515 crore) in education firm NSPIRA Management Services .

Earlier this year, Morgan Stanley Private Equity Asia invested Rs 152 crore ($23 million) in Southern Health Foods, which markets its products under the brand Manna Foods.

Along with this, the investment firm also led a Rs 230 crore ($36.23 million) round in medical devices maker Sahajanand Medical Technologies Pvt. Ltd in January.

Recent deals in NBFC space

Earlier this month, non-banking company Fedbank Financial Services Ltd’s board approved Rs 168.6 crore investment by homegrown private equity firm True North for 17.4% stake.

Last month, TPG Growth led a $42 million (Rs 311 crore) round in non-banking company Ess Kay Fincorp Ltd. TPG Growth is the growth capital arm of US private equity firm TPG Global.

In September, JM Financial said its JM Financial Credit Solutions was raising Rs 650 crore ($90 million) from Singapore sovereign wealth fund GIC Pte. Ltd and other investors.