Mid-market private equity firm Multiples Alternate Asset Management Pvt. Ltd has picked up a significant non-controlling stake in non-banking financial company APAC Financial Services Pvt. Ltd.
APAC said in a statement that Multiples’ investment has taken the APAC group’s share capital to around Rs 400 crore, but it did not specify the investment amount.
VCCircle had reported in June that APAC, which is promoted by former Deutsche Bank Asia-Pacific chief Gunit Chadha, was in talks to raise about Rs 250-280 crore from Multiples.
It is learnt that the founders may have pumped in an additional Rs 40-50 crore as part of the capital-raising exercise. The promoters had initially put in Rs 110 crore in the venture.
Chadha continues to own a majority stake in the NBFC along with the leadership team.
As part of the transaction, Multiples managing director Nithya Easwaran will be joining the board of APAC.
“We like the financial services sector where APAC is looking to build a granular asset portfolio by providing funding to underbanked and underserved micro, small and medium enterprises,” said Renuka Ramnath, founder and managing director at Multiples Alternate Asset Management.
The APAC group started operations in Mumbai in the middle of this year after obtaining a non-banking financial company (NBFC) licence from Reserve Bank of India and a housing finance company licence from National Housing Bank. APAC Financial will focus on wholesale lending while subsidiary APAC Housing Finance Pvt. Ltd will target the affordable housing segment.
Before founding APAC group, Chadha was a member of the global group executive committee of Deutsche Bank and CEO Asia-Pacific.
He also served as managing director & CEO of IDBI Bank.
“We wanted to have an institutional partner who provides both financial and intellectual capital to realise our vision,” said Chadha.
Multiples
The deal expands Multiples PE’s investments in the financial services sector. The firm counts only three financial services companies in its portfolio — RBL Bank, Vastu Housing Finance Co. Ltd and Sanctum Wealth Management, according to VCCEdge, the data research arm of VCCircle. It had previously backed and exited South Indian Bank and Cholamandalam Investment & Finance Company.
Apart from financial services, the PE firm mainly invests in the IT, healthcare, pharmaceuticals and consumer sectors. Multiples had raised its debut $405 million fund in 2011. In its second outing, Multiples raised $550 million under the main fund and a $135 million sidecar fund. Multiples is still investing out of its second fund. The firm began raising money for its $750 million third fund alongside a co-investment fund of $350 million earlier this year.
Currently Multiples manages about $1.1 billion of private equity raised from Indian and global institutions. It has invested in themes around new-to-market opportunities, business turnarounds and shareholder realignment/consolidation.
Some of the key investments made by Multiples includes PVR Cinemas, Arvind Fashions, Delhivery, RBL Bank and others.
SME-focussed NBFCs
APAC Financial Services joins a growing number of NBFCs and even fintech startups that are targeting SMEs at a time when banks have tightened their lending activities in the wake of heavy bad loans.
In November, VCCircle reported that a former executive at AION Capital-backed Clix Capital Services Pvt. Ltd had joined as the head of a non-banking finance company and secured equity funding to kick-start operations.
One of the biggest transactions in the segment was struck in May when emerging markets-focussed private equity firm Actis said it would invest up to $220 million (Rs 1,484 crore) over five years in an NBFC founded by KV Srinivasan, the former CEO of Reliance Commercial Finance. The lender, Actis said, would focus on loans against collateral to SMEs operating in a dozen sub-sectors.
More recently, in September, Ambit Finvest Pvt. Ltd, a unit of Ambit Group, bought the SME lending business of Finmax Credit & Finance Pvt. Ltd to diversify its asset base.