A clutch of private equity investors including pan-Asian investment firms such as New Quest, PAG Asia and ADV Partners, along with IndGrowth, a PE firm floated by former TPG Growth Capital India chief Varun Kapoor, have agreed to invest as much as ₹650 crore in a Mumbai-based listed non-banking finance firm headed by former Religare Enterprises chief executive Shachindra Nath.
Poshika Advisory Services, founded by Nath, will hold a significant minority stake in Chokhani (the NBFC) and Nath will run the company as its CEO. The deal has concluded, and the company will start its lending operations by the end of first quarter of the next fiscal, provided necessary approvals from the regulatory authorities, Nath confirmed to ET.
“The aim is to create an institutionally-backed lending business targeting SME & MSME of certain select segment of the market, which are in need for efficient debt capital,” said Nath. The company also approved raising additional capital of ₹250 crore by way of qualified institutional placement in additional to the capital raised from private equity investors which would take its total capital raise to ₹900 crore.
The deal also involves a merger of the lending business of another non-banking financial company, Asia Pragati Capfin, with Chokhani via an all-stock transaction. Asia Pragati has an estimated asset value of about ₹175 crore and is a portfolio firm of PAG Asia.
The board of Chokhani would be reconstituted and the set of independent directors would include Satyananad Mishra, ex-CIC and ex-chairman of MCX, NK Maini, ex-DMD, SIDBI, Rajiv Agarwal, ex-member, SEBI, Vijaylaxmi Iyer, ex-CMD, Bank of India and ex-member IRDA, Abhijit Sen, Board Member of IDFC, Ranjana Agarwal, Board Member of ICRA and Kurrupaswamy, ex-ED, RBI, said a source close to the development.
The transaction will mark the return of another professional CEO in lending business with institutional backing. Nath, a gold medalist law graduate from Banaras Hindu University, was earlier Group CEO Religare Financial Services, controlled by brothers Malvinder and Shivinder Singh. Nath had served Religare for about 16 years and was one of the key persons who grew the company from a small broking house to a pan-Indian financial services conglomerate. He quit the firm in beginning of 2016 as group CEO after attempting a management buyout which could not go through due to a difference in valuation expectation. economictimes