Warburg eyeing 30% stake in India’s shadow bank Vistaar for $150m – sources

A customer hands Indian currency notes to an employee at a gas station in Mumbai, India August 13, 2018. REUTERS/Francis Mascarenhas/File Photo

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  • India’s shadow banking space has sparked interest from private equity firms
  • Warburg in advanced talks for Indian company Vistaar
  • The private equity firm has already invested in many Indian startups

MUMBAI, Sept 16 (Reuters) – New York-based private equity firm Warburg Pincus LLC is in talks to invest around $150 million in Indian small business lender Vistaar Finance, two sources familiar with the matter told Reuters. . booming credit market.

Warburg’s talks with Vistaar relate to a 30% stake in the shell lender, the two sources said. Talks are at an advanced stage and will value Vistaar at around $450 million, one of the sources said.

Companies like Vistaar in India operate as non-banking financial services companies (NBFCs), lending smaller amounts than traditional banks and targeting mainly customers in cities and towns.

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As of March 2021, India’s NBFC sector had assets worth over 54 trillion rupees ($680 billion). Its growth in recent years has attracted investors including Sequoia Capital and KKR & Co (KKR.N).

Vistaar is already supported by the Indians Saama Capital and Westbridge Capital. She and Warburg declined to comment on Reuters queries.

India’s Kotak Mahindra Capital is advising Vistaar on the private equity deal talks. The investment bank did not respond to a request for comment.

“NBFCs are one of the largest sectors for private equity funds and have a proven track record of performance,” the first source added, explaining the rationale for Warburg’s interest.

Founded in 2010, Vistaar offers small business loans for stores, factories, hotels and manufacturers. It operates 196 branches in 12 Indian states and has lent more than $300 million to date, according to its website.

He says he typically makes business loans of $1,200 to $60,000 for five to 10 years.

The first source also said that apart from the new shares issued by Vistaar, Warburg may acquire shares held by existing investors, although it is not yet clear which of them may exit.

For the fiscal year ended March 2022, Vistaar posted net income of $9.3 million, up 14.5% from a year earlier, according to ratings firm ICRA. Its total income was $54 million during the period.

Reuters reported last year that Warburg was in talks to raise $16 billion from investors for its latest flagship global private equity fund, the largest ever. Read more

Over the past two decades, Warburg has invested over $5 billion in India.

His recent investments have included startups and consumer brands such as headphone maker boAt, beauty and makeup company Good Glamm Group and ride-sharing app Ola. Warburg’s NBFC bets in India include education lender Avanse Financial Services and Fusion Microfinance.

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Reporting by Mr. Sriram; Editing by Aditya Kalra and Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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