Opportunity Amidst Uncertainty: KKR India Eyes SME, Housing Finance Businesses
The Indian unit of global investment firm KKR & Co. is looking to snap up business lines of the country's non bank lenders, as they seek to unlock capital against a backdrop of tight liquidity and higher rates. In particular, the non-banking financial units of KKR India are scouting for businesses in the housing finance segment or those that lend to small and medium enterprises, said a person familiar with the matter who spoke on condition of anonymity.
A default by the once AAA-rated Infrastructure Leasing & Financial Services group has led to a funding squeeze and increased risk aversion towards Indian NBFCs. Many of these firms are now looking to sell both loan portfolios and complete business lines to generate cash.
This gives the two NBFC units of KKR India an opportunity to buy functional business lines, which bring along a branch network and the staff needed to service loan books, rather than just loan portfolios, said the person quoted above. SME and housing loan businesses of a size of between Rs 1000-5000 crore would be of interest to the company, the person added.
KKR India's corporate NBFC currently has Rs 6,000 crore in assets under management, while its real estate NBFC has a book of about Rs 4,000 crore. These two entities operate separately from KKR's core private equity business. The group also has a separate special situations fund, through which it offers structured finance to stressed firms.
BloombergQuint could not confirm the names of companies that KKR is in conversation with. KKR did not respond to an email seeking clarity.
NBFCs with large SME loan portfolios include Bajaj Finance Ltd. and Edelweiss Financial Services Ltd., among others. Capital First Ltd. also has a sizeable SME business but is in the middle of a merger process with IDFC Bank Ltd.
In the housing finance segment, HDFC Ltd, Indiabulls Housing Finance Ltd., DHFL and LIC Housing Finance Ltd. are some of the bigger companies. On Tuesday, Economic Times reported that KKR and other investors are in conversation with Wadhawan Capital, promoter group of DHFL, for a purchase of the company's Aadhar Housing Finance Unit.
Over the last two years, many of these NBFCs have grown rapidly using short term financing and are now scrambling to unlock liquidity and capital by selling assets and portfolios. The turn in the environment has also meant that valuations of some of these assets are now more reasonable.
The person quoted above explained that a reasonable valuation to pay for a business-to-consumer NBFC business is in the range of 2 times book value. For a business-to-business NBFC, an attractive valuation would be closer to 1.5 times book value. However, a tougher part of such a transaction is the due diligence needed to determine the quality of the underlying book, this person added.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
-
'Never Seen This Level Of Negativity': Sandeep Tandon Says The Next Rally May Be Closer Than You Think
Veteran investor Sandeep Tandon says foreign selling is easing, large-caps are due a comeback and mid-caps are crowded, while he turns positive on gold, power and pharma this Diwali.
-
Indians Stay With Family, Not In Hotels | The Reason Why
India still lacks enough clean, reliable and affordable hotels for budget-conscious travellers.
-
The Economic Imperative: Analysing The Material Driving Force Behind India-Canada Strategic Reset
This economic complementarity is further reinforced by deep institutional investment ties and talent mobility, which form the bedrock of the bilateral framework.
