Transaction:

  • InCred Financial Services Ltd (InCred Finance), the lending arm of financial services firm InCred Group, has raised Rs. 500 Crore in its Series D round of funding, becoming the second startup to join the coveted ‘unicorn’ club this year.

About Incred Financial Services Ltd:

  • A former Deutsche Bank executive, Singh founded InCred Finance in 2016 as a tech-enabled lending platform.
  • InCred Group operates in the BFSI space through 3 entities – ‘InCred Finance’ in Lending, ‘InCred Capital’ in Wealth and Asset Management, Investment Banking and Equities, and ‘InCred Money’ in retail bonds and alternative investments.
  • InCred is a new-age lender offering online and offline loans to consumers, small businesses and for education. It manages a loan book of Rs. 7,500 Crore growing at a compound annual growth rate of more than 50% over the last three years.
  • Incred also counts Investcorp, Oaks Asset Management, Moore Capital, Elevar Equity, Paragon Partners, Manipal Group chairman Ranjan Pai and Gaurav Dalmia, the founding chairman of Landmark Holdings (Dalmia Group), among others, as its investors.

Rationale:

  • The latest round values InCred Financial at about Rs. 8,800 Crore ($1.05 Billion).
  • The company did not identify the investors, but said they include a global private equity (PE) fund, corporate treasuries, family offices and ultra-high-net-worth individuals.
  • The latest development comes 16 months after the firm completed its merger with American PE giant KKR’s local non-banking finance arm in July last year in an all-stock deal.
  • InCred Financial Services was formed by the merger of KKR India Financial Services Ltd and the erstwhile InCred Financial.
  • KKR, along with two other investors, the Teacher Retirement System of Texas and the Abu Dhabi Investment Authority, together hold a little more than a third of stake in the merged entity.
  • InCred Finance said it plans to use the capital across its core business verticals—consumer loans, student loans and MSME (micro, small and medium enterprises) lending. In September 2023, Crisil stated that as on June 30, the assets under management (AUM) mix of the company consisted of around 44% of personal loans, 18% of student loans, 9% allocated to other financial institutions, and 8% towards secured school financing, accordingly the wholesale lending book has reduced from 42% in March 2021 to around 17% in June, 2023.
  • Incred is improving overall profitability gradually and reported a net income of Rs 121 Crore supported by rise in share of higher yielding loan portfolio and minimal credit costs during FY2023, RoMA (Return on Managed Assets) for fiscal 2023 improved to 2.2% from 1.1% in fiscal 2022.

Acknowledgements: 

RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)

Disclaimer:

This material has been prepared by the personnel in Vora Corporate Finance which is Investment Banking arm of Vora Management Consultancy Private Limited and looks after Mergers & Acquisitions (M&A), Private Equity (PE), Fund Raising, Debt syndication and Valuations and is based out of Ahmedabad, Gujarat, India. Any views or opinions expressed herein are solely that of individual authors and may differ from view of Vora Management Consultancy Private Limited. This material is proprietary to Vora Management Consultancy Private Limited and is for your personal use only. Any distribution, copy, reprints or forward to others is strictly prohibited.

This material captures the information based on information available in the public domain, public announcements and sources believed to be reliable. Analysis contained herein is based on publicly available information and appropriate assumptions. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute strategic, investment, legal or tax advice. In no event Vora Management Consultancy Private Limited be liable for any use by any party or for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you for evaluating any transaction