Will continue at the helm, says Sammaan Capital CEO Gagan Banga post-IHC deal

For a lending business like ours, equity capital is the foundation. An NBFC is fundamentally a leveraged business and the quality of debt determines whether you can generate returns for shareholders. To get that high-quality debt, you need a long-term, committed promoter, someone who is not looking at this as a three–five year play but as a perpetual investment.

That’s what makes IHC the right partner. They are coming in as part of their India financial services foray. A promoter like this provides comfort to rating agencies, which puts us on a positive rating trajectory. When ratings improve, cost of capital comes down and you can offer better products at better prices. You also get the ability to expand the spectrum of products.

IHC also has the ability to write a single billion-dollar cheque, which is critical for a business of our size. They bring capital but they also bring an ecosystem, especially around technology and AI, where they are very strong. So for us, it is possibly the best outcome we could have hoped for.

Could you explain the structure of the deal, the mix of equity and warrants?

IHC will ultimately own 41.3 percent of the company’s equity. Of this, 26 percent will come in immediately as straight equity. Another 5 percent will also be brought in upfront and depending on timelines, the first tranche of warrants could follow soon after. So practically, 31–32 percent comes in upfront, with the balance 10 percent over 18 months.

The structure ensures that we remain well-capitalised but not over-capitalised. Over-capitalisation is also a problem because it affects your ability to generate healthy ROE (return on equity) for shareholders. This structure allows for efficient investing.

With IHC coming in, will there be any changes in the management?

No. Their long-term intention is to have control over the board but over the next six–12 months, I don’t expect any significant board-level changes. They have no desire to make changes among the top 15–20 people of management either.

The clear mandate to me is to continue to run the company as you are. They are a shareholder backing us with capital, knowledge and experience but they will operate at the board level, not by tinkering with management.

So, you’ll continue to remain at the helm?

Absolutely. I remain at the helm and this investment is a huge validation for the management team. It is capital that has come in to back us.

What does this mean for your strategy? Will you continue with the existing focus or are new initiatives expected?

The immediate focus is to expand the product suite and look at interesting financial services opportunities. But first, we have to utilise the operating leverage already available within the business. Over the next 12–18 months, the goal is to generate better returns for shareholders by driving greater efficiency.

Once that is achieved, we will expand into new products. The segment focus is clear, mid-income to lower-income groups in tier-3 to tier-5 cities. We will look at loan products or related services that make sense for this segment.

Would that mean secured or unsecured loans or both?

It’s not about secured or unsecured, short term or long term. It is about addressing the loan requirements of mid to lower-income India. Whatever makes commercial and business sense, we will pursue.

Given the fresh capital, will you look at inorganic growth — buying portfolios or acquisitions?

Not in the next 12–18 months. That time will be spent on fully utilising the operating leverage within the company. After that, we will see. It is not about organic or inorganic; it is about the segment and what fits our strategy.

How will this investment impact your cost of funding?

Over the next 12 months, leaving aside repo movements, we expect to reduce our cost of funds by at least 150 to 170 basis points.

And what return on equity are you targeting?

By fiscal 2027, we aim to start generating mid-teen ROEs. That’s the goal.

With improved ratings and lower cost of funds, will you be scaling up offshore borrowings?

Yes, our desired offshore borrowings are in the range of $1 to 1.5 billion. Debt is our raw material — it is always opportunistic and tactical, not strategic. Equity is strategic. So we will be in the market whenever there is an opportunity to raise debt at an optimum cost.

Can we expect another offshore issuance this fiscal?

It depends on market appetite and pricing. There is no grand strategy around debt other than keeping it long, diversified, and across as many investors as possible. If a good deal comes, we’ll take it.

The market for NBFCs, especially in your segment, is getting crowded. How do you differentiate yourself?

While India will always have thousands of NBFCs, most of the market share will consolidate around the top 10–15 players, and within that, the top 5–6 will hold a disproportionate share. This investment positions us to get back into that top 3–5 bracket, where we used to be.

From a macro perspective, what’s your outlook for loan demand? Are the headwinds over?

Geopolitics remains uncertain but most of the policy measures are in place. The government has been consistent in providing short-term liquidity support and in driving long-term reforms for Viksit Bharat 2047.

In our segments of housing and MSME lending we see robust demand. These are more tailwinds than headwinds. Affordable and mid-income housing, in particular, continues to see strong demand.

By when do you expect to cross the Rs 1-trillion loan book milestone?

We are targeting that by the end of fiscal 2027.