IndoStar to acquire the Commercial Vehicle Business of IIFL.
IndoStar Capital Finance Limited (IndoStar), one of the leading NBFCs in the country, has signed a binding agreement to acquire the CV finance business of India Infoline Finance Limited (IIFL Finance), a material subsidiary of IIFL Holdings Limited.
The acquisition includes the entire CV finance AUM of Rs. 3,949 Crs as on 31st December, 2018, comprising of Rs. 2,450 Crs of loan portfolio and Rs. 1,499 Crs of securitisation/assignment portfolio, together with 1,337 strong employee team located in 161 branches spread over 18 states. This team has achieved a gross disbursement in excess of Rs.3,000Crs. for FY18 and Rs. 1,723 Crs for H1FY19. The boards of both companies have approved the above transaction.
IIFL Finance is a diversified NBFC providing small-ticket loan products to its customers including Mortgages, loans against property, construction finance, gold loans, SME loans, capital market and micro-finance loans. It had AUM of Rs. 36,400 Crs as on 31st December, 2018; CV loans constituted 11% of the AUM.
IIFL intends to exit this business and focus on its core focus areas of home loans, SME, gold and micro-finance loans. IndoStar Capital, promoted by Everstone Group in 2011, initially started corporate lending business. Since 2015, IndoStar has been building its retail lending business whichaccelerated last year with the set-up of CV finance and Affordable Housing Finance businesses. This acquisition is truly transformational and would catapult IndoStar into becoming a leading player in the attractive high growth CV financing space and help it to build a diversified profitable lending book with a product mix comprising CV Finance, Corporate Lending, SME Business Loans and Affordable Housing Loans.
Commenting on the acquisition, R. Sridhar, Executive Vice-Chairman & CEO, IndoStar Capital said, “This strategic acquisition which is profit accretive from day one helps IndoStar to significantly accelerate timelines in achieving our goal of becoming the leading retail finance NBFC having a diversified and profitable asset book with strong growth prospects. I would like to take this opportunity to welcome IIFL customers and employees to IndoStar and assure them that they will experience a seamless transition and a high level of support from IndoStar”.
Nirmal Jain, Chairman, IIFL Group commented that “this is a win-win transaction for both the organizations. Given Mr. R Sridhar’s experience and credentials to lead CV financing business, IndoStar will become a significant player with scale. Our staff will enjoy seamless transition and customers will have uninterrupted service from the same people and locations. IIFL Finance will use capital to scale up its core products of affordable home loans, small business loans and gold loans. This will allow IIFL Finance to grow, without having to dilute equity in near future.”
IIFL’s investment banking team was the exclusive advisor to the transaction.