PremjiInvest, the family office investment arm of Wipro Ltd founder-chairman Azim Premji, has struck a deal to acquire a 9.7% stake in TVS Credit Services Ltd for for Rs 737 crore (about $90 million).
The transaction involves a combination of primary capital infusion into TVS Capital and a secondary share purchase, the non-bank lending arm of two-wheeler maker TVS Motor Company Ltd said.
TVS Credit also said that, of the total investment, it has raised fresh equity capital of Rs 480 crore. This essentially means the secondary portion was Rs 257 crore. The lender didn’t disclose the name of the selling shareholders.
TVS Motor owns an 85% stake in TVS Credit. The NBFC’s other shareholders include housing financing major HDFC Ltd, which holds a 6.1% stake, and Phi Capital, which holds around a 4% stake in the company, according to VCCEdge, the data research platform of VCCircle. A few employees also hold some stake in the company.
The development comes less than two months after VCCircle exclusively reported in April that PremjiInvest was likely to lead a funding round into TVS Capital. Previously, in December, VCCirclehad reported that the Chennai-based lender was planning to raise about $150 million through a share sale that might see some of its existing investors pare their holdings. The identity of the potential investors wasn’t known at the time.
TVS Capital said in a statement it will use the fresh capital to expand its customer base in new markets, increase the channel partner network, and advance its digitisation journey.
“As we embark on the next phase of our journey, our focus will be on leveraging digitisation to reach new customers and achieve a higher growth momentum,” said Sudarshan Venu, Chairman, TVS Credit.
TVS Credit’s assets under management grew 48% over last year to more than Rs 20,600 crore in FY23. It has a customer base of more than one crore and a network of more than 40,000 touchpoints across the country.
“TVS Credit proposes to leverage technology and digital partnerships through an omni-channel approach to widen its customer base and to significantly reduce friction involved in traditional financing,” said TK Kurien, CEO and Managing Partner, PremjiInvest.
Nomura Financial Advisory and JM Financial acted as financial advisors and Khaitan & Co. acted as legal advisor on the transaction.
The large fundraising plan comes within a few months after the company appointed Ashish Sapra as its new chief executive officer. Sapra took charge in September last year.
TVS Credit was set up in 2009 as part of the $8.5-billion TVS Group, as a Reserve Bank of India-registered non-deposit taking NBFC. Besides being a key financier to its parent TVS Motor, TVS Credit primarily offers vehicle financing loans, tractor loans, consumer durable loans, used commercial vehicle loans and unsecured loans.
For the nine-month period ended 31 December 2022, the non-bank lender reported a net profit of Rs 278 crore, jumping from Rs 58 crore a year earlier. Its assets under management grew 53% year-on-year to Rs 19,541 crore.
Private equity funds bet $2.2 billion on India's non-bank financial companies (NBFCs) last year, up 57% from 2021, a recent report from Bain and Co showed. Last year, Warburg Pincus invested in Indian non-bank lender Vistaar.
