KKR and InCred announced that they have entered into a strategic transaction to create a diversified Indian lending company by combining KKR India Financial Services Limited (KIFS) and InCred Financial Services (InCred Finance), the retail and micro, small and medium enterprise (MSME) lending business of InCred.
This transaction will bring together two of India’s best-known non-banking finance companies and combine their resources to better meet the needs of retail borrowers, small businesses, and entrepreneurs across India, according to the statement.
Founded in 2016 by Bhupinder Singh, InCred Finance is a tech-enabled lending institution that spans online and offline models across consumer, small businesses, and education lending. KIFS, which was founded in 2009, provides Indian businesses with financing solutions.
InCred Finance will continue to provide clients with flexible funding solutions that meet their needs, but with the additional benefits of operational scale, enhanced technological capabilities, and access to an even broader suite of financial solutions. On a pro forma basis, InCred Finance will have an equity base of US$300 million and a balance sheet of US$750 million. With a strong liquidity profile, substantive capital base, and low leverage, InCred Finance is well positioned to embark on its next phase of growth, the statement said.
Bhupinder Singh, Founder and CEO of InCred, said, “We are thrilled to announce this transformative partnership with KKR. Their long-term vision and commitment to the India story fits perfectly with InCred’s objective of creating a leading financial institution that will play a meaningful role in India’s credit ecosystem. We welcome the KIFS team to InCred and look forward to working with KKR as we seek out compelling lending opportunities across India.”
Gaurav Trehan, Partner and CEO of KKR India, added, “This is a great milestone for KKR’s India business considering the market-leading retail lending company Bhupinder and his team have created in just a few short years. Bringing together InCred Finance and KIFS will create a larger enterprise with the enhanced resources and investment acumen. KIFS has been a long-time market leader and we are excited to address India’s lending opportunity with an even greater array of flexible solutions for borrowers.”
Under the terms of the agreement, InCred’s retail non-banking finance business and KIFS will be combined to form InCred Finance, which will be led by CEO Bhupinder Singh.
A consortium consisting of Singh, as well as existing InCred investors, will own a majority stake in InCred Finance. A consortium led by KKR and comprising existing investors in KIFS will retain a significant minority stake, the release said.
KKR will be the single largest investor in InCred Finance at the time of the transaction’s close and will remain a long-term strategic partner to the business, it added.
The transaction is not a monetization event for investors of InCred, KIFS or KKR. InCred Finance will be a strategic investment for KKR and will not be a portfolio company in a KKR fund. It will operate independently of KKR.
Avendus Capital advised KKR on the transaction. EY acted as KKR’s financial advisor and AZB acted as KKR’s legal advisor. InCred Finance was advised by Credit Suisse and InCred Capital. KPMG and Bobby Parikh Associates acted as InCred’s financial and tax advisors and Trilegal acted as InCred’s legal advisor.
