Kolkata: Ess Kay Fincorp, the Jaipur-based vehicle financier, has raised Rs 150 crore in equity and bonds sale as it looks to expand business as the Indian economy is projected to grow 7.3% in 2018-19 as per World Bank.
The promoters of the non-banking finance company have diluted about 18% of their holding to raise Rs 100 crore from private equity investors led by US-based Norwest Venture Partners. The company raised another Rs 50 crore from two local mutual funds in bonds, its vice president Vivek Singh said.
The other equity investors are Baring Private Equity India AIF and Evolvence India Fund II Ltd. This is the second round of private equity investment in the company which will celebrate its silver jubilee next year.
The investors have also participated in a secondary sale involving Rs 93 crore as Ess Kay's 25% shareholder BanyanTree Growth Capital exited fully.
Norwest picked up 24.46% in the non-bank lender through both primary and secondary sale while Baring took 11.43% and Evolvence 8.23%, taking the institutional holding to 44.12%. Promoters' holding dropped to 55.88% from around 73% earlier.
"The equity funding will help us leverage better and instill confidence in our lenders," Singh told ET. It has a paid-up equity of Rs 190 crore at present, up from Rs 86 crore earlier.
ET had published a report on August 30 stating that Ess Kay was in talks with investors for equity investment.
The company has also raised Rs 50 crore in bonds which were subscribed by Sundaram Asset Management Company and Principal PNB Asset Management Company.
The bonds carry a two-year maturity and a partial 24% guarantee from IFMR Capital, which managed the bond sale.
"The uniqueness of this structure lies in the unconditional and irrevocable guarantee which lowers the risk for investors while cuts borrowing cost for the originator," said IFMR Capital chief executive Kshama Fernandes.
She said the guarantee and an-inbuilt cover pool in the product reduce risks for investors and provides credit enhancement for the issuance. "For originators, such structures offer higher ratings and enable them to access mainstream investors like mutual funds, pension funds and insurance companies," said Fernandes.
Ess Kay Fincorp with Rs 1150 crore loan outstanding at the end of December last year looks to grow its loan portfolio to Rs 1300 crore by March.
Financing second hand vehicles is its major business focus and constitutes about 90% of the loan book. The lender has also diversified into SME and agri equipment financing in a bid to diversify its business risk.