KKR looks to buy another NBFC to bolster lending business

KKR, one of the largest global investment firms, is looking to acquire a non-banking financial company (NBFC) in the country to bolster its lending business, said a source in the know.

The investor, which has assets under management (AUM) of $149 billionglobally, wantsto disburse loan against properties, shares, structuredloansandandlend across sectors, the source said.“ItwantstobuyaNBFC whichhasAUMofatleast~10,000 crore. Though it has two NBFCs at present, KKR wants to buy another NBFC so thatitcanscaleupfaster,” saidthesource. KKR has already sent feelers to bankers, sources said.

When contacted, KKR declined to comment on the matter. If its plans go through, this will be the fourth nonbanking financial company it will own. KKR has sector-agnostic NBFC called KKR India Financial Services, set up in 1995, and a real estate-focused NBFC called KKR India Asset Finance where Singapore’s sovereign wealth fund GIC is an investor. Its investee company Avendus Capital also has a NBFC.

According to the source, KKR has lent over ~15,000 crore through its NBFCs and debt funds. Its US counterpart Blackstone is also looking to start lending to corporates and other entities, reports said early this year.

According to a senior executive with a Mumbai-based NBFC, KKR can acquire only PE-backed NBFC as other promoter-led NBFCs are not up for sale now. KKR follows multi-format strategy to build its loan book. In addition to NBFCs, it also has multiple alternative investment funds which provide loans. KKR also co-invests with institutional investors to give big-ticket loans.

KKR, the source said, also wants to invest with other fund managers to invest in real estate projects.

“If somebody wants ~500 crore, they can invest ~150 crore to ~200 crore,” the source said. “Current NBFC valuations are fairly rich for majority stake and to earn a fair return, one must have a longterm strategic outlook. Itis better to acquire loan books if the aim is to build asset base to achieve scale and size,” said Vimal Bhandary, former Chief executive officer at IndoStar Capital. KKR’s buyout plan comes at a time when NBFCs set up by Ajay Piramal, Edelweiss, L&T Finance, IIFL and others, are growing their businesses aggressively. According to sources, Piramal, Edelweiss and IIFL have loan books of ~25,000-30,000 crore.