Mumbai: Renuka Ramnath-founded private equity firm Multiples has invested Rs 250 crore in APAC Financial Services — which is promoted by former Deutsche Bank Asia chief Gunit Chadha. With this investment, the firm’s capital base has expanded to nearly Rs 400 crore and gives Multiples a significant non-controlling stake.
APAC focuses on lending to small and medium businesses and on affordable housing. Unlike most financial services promoted by professionals, APAC Financial Services was funded by capital brought in by Chadha and other members of the management. Even after fund infusion the professional promoters continue to hold majority stake.
According to bankers, the transaction shows that well-governed NBFCs with focused business models and experienced leadership teams are getting funded by private equity companies and are being provided leverage by banks, even after the NBFC crisis a few months ago.
“This speaks highly of the financial services sector and the opportunities it presents to market participants who are building their businesses with risk-mitigated business models. And underwriting the financial services sector is the India macro, which is very promising and real,” said Chadha.
Multiples Alternate Asset Management founder and MD Renuka Ramnath said, “We like the financial services sector where APAC is looking to build a granular asset portfolio by providing funding to underbanked and underserved micro, small and medium enterprises. With appropriate risk controls and significant digitisation and innovation, this looks like a scalable business model.” Multiples Equity MD Nithya Easwaran will be joining the board of APAC.
According to Chadha, the current capital base will allow APAC to grow its business without fresh equity for two years. “We are in a position to build a book of Rs 1,000 crore by leveraging the capital and we have banks willing to lend,” said Chadha.
APAC group started operations in Mumbai in mid-2018 after obtaining an NBFC licence from the RBI and a housing finance company licence from the National Housing Bank. Chadha promoted the firm after stepping down as Deutsche Bank CEO Asia-Pacific and member of the bank’s global group executive committee. Earlier, Chadha was CEO of Deutsche Bank India and MD & CEO of IDBI Bank.