MC Exclusive | PE firm Actis-promoted NBFC Profectus Capital looks to sell stake, induct a partner

Actis held a 100 percent stake in Profectus Capital as on December 31, 2022. In India, it also backs digital payment solutions player Pine Labs.

Actis-owned medium and small enterprises (MSMEs)-focused non-banking finance company (NBFC) Profectus Capital is in a stake sale mode and looks to onboard a partner, three persons in the know told Moneycontrol on condition of anonymity.

Six years after setting up Profectus Capital and backing a team led by KV Srinivasan, the former CEO of Reliance Commercial Finance, the UK-based private equity firm has engaged advisors in a bid to monetise its investment, one of the persons above said.

"A joint sell-side mandate has been given to investment banks Avendus Capital and DC Advisory. The plan is to unlock value and dilute stake via a combination of a primary issue and secondary sale of shares," a second person said.

"These are early days in the proposed transaction, which hasn't been launched as yet. Depending on negotiations, this may either be a minority or majority stake sale going ahead," added a third person.

Actis held a 100 percent stake in Profectus Capital as on December 31, 2022. In India, it also backs digital payment solutions player Pine Labs.

Actis, Profectus Capital, Avendus Capital and DC Advisory declined to comment in response to email queries from Moneycontrol.

Profectus is registered with the Reserve Bank of India as a systemically important, non-deposit-taking NBFC. It focuses on two specific clusters - services, which include school funding (K12), healthcare, print and packaging and hospitality, and manufacturing, which involves auto ancillary, food processing, pharma, engineering and machine tools, plastics and chemicals, and home textiles.

According to the firm's website, it has 8,000-plus customers and is present in more than 29 locations across the country.

For the year ended March 31, 2024, total Income from operations stood at Rs 403 crore, compared to Rs 273 crore for the previous fiscal year. Net profit before tax was at Rs 64 crore, compared to Rs 40 crore a year back, and assets under management stood at Rs 3,070 crore, reflecting a 22 percent growth over the last year.

"The company would target to attain a book size of Rs 10,000 crore by FY2027 with excellent book quality and a sustainable return on equity of 15 percent," according to the CEO Srinivasan.

Deals galore in NBFC space

Here's a slice of some of the frenetic deal actions from the NBFC segment this year:

Earlier in the week, Moneycontrol had reported that EQT, CVC Capital and Bain Capital had expressed interest in the ongoing mega stake sale process in Kedaara Capital and Partners Group owned listed NBFC Avaas Financiers (formerly AU Small Finance Ltd).

Vehicle financier Kogta Financial raised $148 million in a Series E funding round from Ontario Teachers’ Pension Plan, giving the Canadian pension fund a significant minority stake in the Jaipur-based non-bank lender.Moneycontrol was the first to report the fund raise on June 26.

Also Read: HDFC Bank in talks with credit funds to sell 20% of HDB Financial

Chennai-based top retail NBFC Shriram Finance announced the sale of its subsidiary Shriram Housing Finance to global private equity firm Warburg Pincus for Rs 4,630 crore on May 13.

IPO-bound Avanse Financial Services, an education-focused non-bank financial company backed by Warburg Pincus and Kedaara Capital, announced on March 26 that it has raised primary capital of Rs 1,000 crore.

This round of funding was led by Mubadala Investment Company, an Abu Dhabi-based investment company, with participation from Avendus PE Investment Advisors Private Limited through its fund Avendus Future Leaders Fund II.

In February, digital non-banking finance company Credit Saison (CS) India said Japan's Mizuho Bank acquired 15 percent stake in it for Rs 1,200 crore.
More than eight years after picking up a majority stake in Avendus Capital, US private equity major KKR has revived the process to exit the leading home grown financial services firm, Moneycontrol reported in February.