Not chasing AUM; to stay off wholesale, realty lending: APAC Fin’s Randhir Singh

Not chasing AUM; to stay off wholesale, realty lending: APAC Fin’s Randhir Singh

Deutsche Bank’s former Asia-Pacific chief Gunit Chadha, along with others, set up Mumbai-based APAC Financial Services Pvt. Ltd last year, which houses a non-banking financial company (NBFC) as well as a housing finance unit. APAC Financial has now started lending across micro, small and medium enterprises (MSME) as well as affordable housing segments, besides exploring different aspects of the market. Randhir Singh, chief executive officer of SME business at APAC Financial, and member of founding team, talks to VCCircle about the target segments, long-term plan and the impact of the liquidity crisis on the NBFC space. Edited excerpts:

Please take us through the initial discussions and challenges in the process of setting up APAC Financial.

We first discussed the idea of starting a new NBFC almost two years back. To back our conviction, we invested a significant part of our savings in the new venture (about Rs 125 crore) before inviting our private equity partner Multiples Alternate Asset Management Pvt. Ltd to acquire a significant minority stake in APAC Financial Services.

Do you have a differentiated strategy because a bunch of NBFCs have lately been set up to target MSMEs? Do you think the lending space is getting crowded?

I think the opportunity is quite large and there is space for many players.

We are probably the only NBFC platform that caters to all three segments – micro enterprises, small enterprises and medium Enterprises across India including small cities and semi-urban centres.

APAC Financial has decided to stay away from wholesale and real estate developer lending in either NBFC or housing finance, even though it would have been easier to build asset books in these segments.

Your venture is shaping up at a time when the NBFC space is embroiled in a liquidity crisis. How has that impacted your company and how are you manoeuvring through it?

We have not been impacted since we are equity-funded and have no borrowings currently. We do, however, have in-principle sanctions from high-quality banks and will borrow as and when required. It’s good to see that governance premium has gone up exponentially for NBFCs in the last six months.

How are you using technology for tapping into your target segment?

APAC has the digital functionality of a new-age fintech firm but is supplementing that with physical branches for better quality client-origination and collection outcome. Technology is an integral part of all our processes — origination, credit underwriting, monitoring, collections and processing of transactions.

Could you give us a sense of your geographical presence and future plans?
We are currently operating from four locations and will have about 20-plus branches by March 2020.

What is the larger game plan? What kind of portfolio in terms of size and variety would you like to create five years down the line?

Our focus is on building a granular portfolio by targeting underserved and underbanked segments that have pricing power, scale and regulatory tailwinds. We are excited that some very senior managers with relevant experience in MSME business and affordable housing segment have joined APAC Financial. We are not chasing AUMs (assets under management) and don’t have a five-year target.