TPG Growth, a middle-market and growth equity platform of alternative asset firm TPG, multi-stage growth investment firm Norwest Venture Partners and Evolvence India, together have led a $33 million (Rs 235 crore) equity investment in Ess Kay Fincorp, a non-bank finance company, it said on Tuesday.
While TPG is investing for the second time, others are investing for the third time.
Ess Kay Fincorp primarily provides financing for income generation activity to the commercial vehicle segment and small businesses in rural and semi-urban regions across North and West India.
The firm was founded in 1994 by first-generation entrepreneur Rajendra Setia. Ess Kay Fincorp today has a presence across more than 300 locations in Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Punjab, and Haryana, servicing mostly low-income and self-employed individuals.
It has over 130,000 customers, employs more than 3,000 people and has a loan book of Rs 2,500 crore.
The average ticket size for vehicle financing is Rs 3 lakh over an average tenure of three years, and Rs 7 lakh for five-year SME loans.
“This equity infusion along with the right strategy will not only propel our growth but will also further cement our position in terms of our footprint, services, and technology vis-a-vis our competition,” said Setia, managing director and CEO of Ess Kay Fincorp.
Gaurav Trehan, Partner at TPG said the PE firm has noted the progress since its initial investment in October 2018.
TPG Growth had led a $42 million (Rs 311 crore) funding round in Ess Kay Fincorp last year where other existing investors Norwest and Evolvence India also took part.
In January 2018, Norwest had led a $32 million (Rs 200 crore) funding round in Ess Kay. PE firm BanyanTree Growth Capital had fully exited the company in that round.
“Ess Kay continues to surpass our growth and profit expectations, having grown AUM by 3x and PAT by 10x over the last eight quarters while maintaining robust asset quality,” said Niren Shah, managing director at Norwest Venture Partners.
Ess Kay Fincorp had previously raised its first investment in 2012.
Last month, the company was looking to raise $40 million (Rs 283.21 crore at current exchange rates) in debt funding from FMO, the Netherlands’ development finance company.
Ess Kay would use the capital to enable its borrowers to buy and convert gasoline- and diesel-powered cars into compressed natural gas (CNG) vehicles.
Prior to the current round, Setia was the Ess Kay’s largest shareholder, holding 44% of the company. Other shareholders were owning the rest with Norwest Venture Partners with 24%, TPG Growth with 13%, the Baring Private Equity India with 9, and Evolvence CoInvest holding 8% of the company.