Blackstone will buy about 16% of IIFL Finance for 50 billion rupees, or about $535 million, the Indian non-bank lender said on Tuesday, extending a flurry of investments by global firms in the financial sector of Asia’s third-largest economy as they seek exposure to its growing credit market.
Recent deals include Canada’s Fairfax Financial Holdings’ proposed acquisition of a 60.72% stake in IDBI Bank, Bank of America buying a 49.9% stake in the non-bank lending arm of Jio Financial Services, Japan’s MUFG‘s investment in Shriram Finance, and Dubai-based bank Emirates NBD’s 60% stake purchase in RBL Bank.
Blackstone’s investment in IIFL Finance will give it access to fast-growing segments including loans against gold and small business credit.
The investment is part of a 64.14 billion rupee ($682.87 million) capital raise by IIFL, which also includes a 12.64 billion rupee investment by existing shareholders Nirmal Jain and R. Venkataraman, and a further 1.5 billion rupees from Anchorage Capital.
Blackstone will invest via compulsorily convertible preference shares.
“The investment strengthens our balance sheet and gives us the headroom to scale our franchises, invest further in technology, and deepen our co-lending partnerships with banks,” said Nirmal Jain, founder and managing director of IIFL Finance.
The investment will raise IIFL Finance’s capital adequacy ratio to about 30% from 17%, the company said.
The additional capital will support growth in its secured lending businesses, particularly gold finance, and could help improve its credit ratings and lower borrowing costs over time, the company added.
IIFL Finance had assets under management of 1.24 trillion rupees as of September-end, on a consolidated basis. Its gross non-performing assets as a percentage of its total loans stood at 1.5%, down 7 basis points from three months earlier.
Reuters
