Stock broking and financial services group Karvy has initiated efforts to sell majority shareholding in its non-banking finance arm, Karvy Finance, to raise funds for reducing leverage and financing future plans.
According to people familiar with the issue, Karvy is talking to a group of private equity players, including large names such as Blackstone, Everstone, JC Flowers, CX Partners and PAG.
“The group is looking at possible valuations of about Rs 650-975 crore, which it intends to use in reducing debt and for its future plans,” said one of the companies mentioned above.
Last year, at various media interactions, Karvy Finance had mentioned it was looking to raise about Rs 600 crore to meet growing demand for loans from micro, small and medium enterprises.
The NBFC arm, run by Harvard alumni Amit Saxena, has a loan book of Rs 2,500 crore and has also announced plans to start an affordable housing loan company, for which it would require funds.
In an interaction in March, Saxena told HT that Karvy Finance has been growing at a faster than the industry average. “There is a strong demand from small retail and pharma units who see a rise in their businesses. This is driving the growth,” he had said.
In a March report, ratings agency ICRA said the Rs 4.7-trillion NBFC retail credit market will expand by 19-22% in 2016-17, as against 19% in first nine months of 2015-16. The report also estimated that NBFCs will need to mobilize about Rs 2.2-2.4 trillion funding in 2016-17, out of which bond mobilization could be to the extent of Rs 600-700 billion.
However, when contacted, Karvy group chairman C Parthasarathy said while the group is exploring various and ways and means to raise money, the private equity route is not being considered now.
The private equity firms mentioned above declined to respond to queries mailed by HT. Blackstone, which recently acquired a majority stake in software firm Mphasis, and Everstone did not comment on the issue.
Incidentally, one of the other PE firms, PAG, had in January, raised its second pan-Asia private equity buyout fund of $3.6 billion to invest in major markets in Asia.
PAG is one of the region’s largest Asia-focused alternative investment managers with $15 billion in equity under management. Its spokesperson did not comment on the matter.