Exclusive: True North in talks with companies for more investments in the BFSI sector, says Divya Sehgal

The PE firm, Sehgal highlighted, is in talks with some entities concerning investments.

Home-grown private equity firm, True North, will continue to invest in banking finance services and insurance (BFSI) companies, said Divya Sehgal, Partner, True North. The PE firm, Sehgal highlighted, is in talks with some entities concerning investments.

“We are having conversations concerning our investments across the asset side and liability side businesses with some players in the BFSI industry,” Sehgal said.

True North is a stakeholder in Fincare Small Finance Bank, FedFina and Home First Finance among other BFSI companies. Alongside True North, TA Associates, Leapfrog and Tata Capital Financial Services are other investors in Fincare SFB.

In an exclusive interaction after the Fincare-AU SFB merger, Sehgal said that the aim will be to focus on overall growth of the merged entity.

Adding to that, Sehgal said: “Gold and microfinance will be new segments for AU SFB and Fincare’s strong portfolio in these segments will lead to new businesses’ growth.”

Edited excerpts:

Can you highlight some key things about the merger?

With the merger, we will become shareholders of the merged entity and we plan to retain our stake. AU SFB is larger than Fincare SFB and our profits largely run in sync. For example, in H1 of FY24, AU SFB had profits of around Rs 800 crore and Fincare had around Rs 200 crore. Hence, we think the merger was perfect and the combined entity will have a combined flavour.

Also read: Business, geographical expansion key in AU-Fincare merger: experts

Do you plan to raise your stake in the merged AU SFB?

Currently, we have no plans to raise our stake. We are now focusing on the execution and other requirements of the merger.

How will the infusion of Rs 700 crore by the promoter of Fincare SFB help in the combined entity?

The capital infusion will be consumed to grow both sides of the balance sheet in the merged entity. It will be used for solvency and growth purposes and to build a strong institution.

You recently sold your controlling stake in Niva Bupa Insurance and you have a stake in Fincare SFB FedFina, HomeFirst Finance and other BFSI companies. How do you look at investing in the industry?

If you see our investments, we like businesses which are more on business to consumer (B2C) rather than business to business (B2B), whether in insurance or banks or lending or something else. A consumer centric business helps in generating higher recurring income. And that is how we would like to build these businesses.

Additionally, we are typically interested in smaller ticket businesses and these businesses do not have much competition. Our intention is not to compete with industry players who have business dominance in some segments.

Are any investment deals in your radar in the BFSI industry?

There are conversations happening concerning our investments across the asset side and liability side businesses with some players in the BFSI industry. It would be too soon to speak about the specific company and details as these are ongoing conversations.

Now with the process for merger happening, what about Fincare SFB’s IPO?

The initial public offering (IPO) of the bank will be on the backburner. We are entirely focusing on the merger and are waiting for the regulatory and all necessary approvals.

Lastly, what is the next step in the merger?

Geographical distribution is one of the key things that Fincare brings in AU SFB. Now AU SFB will have more business opportunities in the Southern states.

Additionally, if you see, AU SFB has limited business in the gold and microfinance business. Whereas Fincare has a stronghold in these two businesses. Here, new segments will open for AU SFB with Fincare SFB’s expertise in the market.