Mumbai: Sandeep Thapliyal, head of commercial and investment banking at RBL Bank Ltd, will head the new non-banking financial company (NBFC) floated by Avendus Capital Pvt. Ltd, said two people aware of the development.
Thapliyal will join as chief executive of Avendus Finance Pvt. Ltd by September, said one of the people, both of whom spoke on condition of anonymity. Thapliyal has already put in his papers at RBL, but is yet to leave as he has a key role in the bank’s upcoming initial public offering (IPO), said the second of the two people.
US-based private equity fund Kohlberg Kravis Roberts & Co. Lp (KKR) bought Mumbai-based Avendus Capital for about $115 million in November. As part of the deal, KKR committed to invest another $60 million in the NBFC, said the second person.
Thapliyal, who has more than 20 years of experience in corporate banking, investment banking, commercial banking, project finance and asset reconstruction, heads the commercial banking coverage franchise at RBL, which includes the SME (small and medium enterprise) and mid corporate segments. He is also responsible for the credit products group, which undertakes credit evaluation of commercial banking clients, according to his profile on the bank’s website.
Previously, Thapliyal was managing director of investment banking at Religare Capital Markets Ltd, covering the industrial sector. He also spent over 10 years with Citibank in commercial banking, and played a key role in setting up its commercial banking franchise.
Thapliyal did not respond to calls and an email sent on Friday. Spokespersons for KKR and Avendus declined to comment.
An RBL spokesperson denied that Thapliyal has resigned.
KKR bought a stake of about 60% in home-grown Avendus from investors including Eastgate Capital Group and Americorp Ventures. The Avendus Group has four verticals—Avendus Capital Pvt. Ltd, Avendus Wealth Management Pvt. Ltd, Avendus Capital (UK) Pvt. Ltd and Avendus Capital Inc. (US). Investment banking accounted for almost 80% of its revenue of about Rs.200 crore in 2014-15.
KKR India already runs KKR India Financial Services, an NBFC, as well as another real estate-focused NBFC through which it offers structured loans. Since 2008, KKR has disbursed about $2.6 billion through various credit platforms and made $1.4 billion in private equity investments.
On 11 May, Mint reported that Avendus and KKR were talking to senior bankers to head the NBFC business.
“KKR is driving the process and they are willing to pay top dollar to hire the best,” the report said, citing people close to the development.
Meanwhile, RBL Bank’s IPO to raise about Rs.1,500 crore is expected to open in the first week of August. In April, the bank received conditional approval from capital markets regulator Securities and Exchange Board of India for the IPO, which was previously on hold due to violations of the Companies Act. The company had allotted shares via rights issues to 2,591 investors in February 2003—far higher than the ceiling of 200 investors.
If the IPO is launched, RBL Bank will become the first bank to go public since December 2010, when Punjab and Sind Bank raised around Rs.480 crore from the capital markets.
Alok Prasad, founder-CEO of the Microfinance Institutions Network, an industry body, finds an advantage for NBFCs over banks. “Banks are currently facing very challenging times. And, given the high NPA levels, ‘take no risks’ has become their mantra. In comparison, NBFCs, particularly the newer ones who have adopted cutting-edge technology platforms, are doing much better. Aggressive lending, focus on segments such as MSMEs (micro, small and medium enterprises) that the mainstream banks tend to ignore, lower operating costs and superior processes with faster decision-making have made them outpace the banks by a margin,” he said.
In 2015, private equity investments in India’s financial services sector grew 83% to $2.2 billion from $1.2 billion in 2014, according to data from VCCEdge. Out of this, NBFCs and other services (diversified financials) saw a growth of 200% at $1.9 billion (against $643 million in 2014) as compared with banks ($50 million) and insurance ($250 million).
“It is also noteworthy that typically banks get a return on assets of 1-1.5% while NBFCs are able to achieve 2%-plus levels. Recognizing the current potential of NBFCs, investors are showing renewed interest in this space,” Prasad added.