IKF Finance investors and promoters are looking to sell a majority stake in the Hyderabad-based non-banking lender in a deal that could value it at $200 million to $250 million, three people with knowledge of the development said.
“Motilal Oswal PE, which holds a significant minority stake in the company, is looking to exit and primary fundraising is also likely to take place, leading to a majority stake being offered,” one of them said.
Motilal Oswal Private Equity, or MOPE, first invested in IKF Finance in 2015. In April last year, IKF Finance raised $250 crore in a funding round led by Action Digital Transformation Fund.
“The deal, depending on buyer interest, is probably a full sale if the right price is set,” said the second of the three people, who spoke on condition of anonymity.
In the absence of a second generation running the business, developers are likely to hand over control to incoming buyers, this person said.
Queries emailed to Motilal Oswal Group and IKF Finance did not elicit any response.
Founded in 1991 by VGK Prasad, IKF Finance has a presence in commercial vehicles, construction equipment and three- and four-wheeler segments, and in financing for small and medium enterprises.
As on December 31, promoters held a 42.84% stake, followed by two funds (India Business Excellence Fund II – 11.12% and IIA – 18.60%) managed by Motilal Oswal Private Equity.
Up to 7.96% of the company is held by Accion Digital Transformation Fund and another 7.96% by Teachers Insurance and Annuity Association of America.
Continuous growth
IKF Finance’s total revenue increased to $287 crore in 2022-23 $221 crore in the previous year, while net profit improved to $50 crores $40 crore, according to Care Ratings.
For the first nine months of FY24, IKF reported a net profit of $47 crores on a total income of $300 crore and a return of 2.11% on total assets and a credit cost of 0.51%.
IKF Finance has been able to record continuous growth with comfortable capitalization.
During the three years ended March 31, 2023, IKF grew at a compound annual growth rate of 23%, from $1,315 crore as on March 31, 2020 a $2,452 crore by the end of March 2023, Care Ratings said in a statement.
In FY23, IKF disbursed loans worth $1,674 crore, up 71% from FY22.
In the first nine months of FY24, IKF Finance disbursed $1,725 crore, which improved its assets under management to $3,222 crore as on December 31, $2,452 crore as on March 31, 2023.
Vehicle financing remains a key area of focus for IKF Finance. It represented approximately 77% of the lender’s total assets under management as of December 31.
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