IIFL Group roped in the world's oldest development finance institution, CDC Group of Britain, to expand its non-banking finance business under which the British government fund will pump in Rs 1,000 crore for a 15 percent stake.
This investment makes a second coming for the UK government-owned development finance institution as the CDC Group was the first private equity investor in the IIFL Group in the late 1990s.
IIFL Holdings said under the agreement, CDC will make an investment of about Rs 1,000 crore in its wholly-owned subsidiary India Infoline Finance for a 15 percent consideration in the company.
Founded in 1948, CDC's mission is to support building of businesses throughout Africa and South Asia, create jobs and making a lasting difference to people's lives in some of the world's poorest places.
It provides investment capital in all its forms, including equity, debt, mezzanine and guarantees, and this capital is typically used to fund growth. CDC uses its own balance sheet to invest and has AUM of 3.9 billion pounds.
The CDC Group's recent investments in India include Narayana Healthcare, Ratnakar Bank and Pristine Logistics.
The new money will help the IIFL Group expand the financing business and address capital needs of under-served segments through diversified offerings, said the Nirmal Jain- led company, majority owned by Canada-based NRI Prem Watsa.
The investment is by way of compulsorily convertible preference shares, which on conversion, will result in about 15 percent equity stake for CDC in IIFL Finance on a fully diluted basis.
IIFL Finance is into home and property loans, gold loans, commercial vehicle finance, healthcare finance, loan against securities and SME business loans.
For the year to March 2016, its loan book stood at Rs 17,770 crore and net profit was Rs 340 crore. IIFL Finance was incorporated in 2004 as India Infoline Investment Services and was converted into a public limited company in 2007.
Commenting on the pact, IIFL Group founder Nirmal Jain said, "CDC was the first private equity investor in IIFL during our start-up phase in 1999. Our strategy of focusing on small ticket retail credit to under-served geographies and segments resonates with CDC's investment objectives." CDC South Asia head Srinivasan Nagarajan said, "We originally invested in IIFL in 1999 and has seen the company go from strength to strength. This new investment will help IIFL Finance grow further.
"Our ability to provide long-term capital means we can provide IIFL Finance with the patient backing it needs to reach even more customers in under-served sectors."
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