Mumbai: Renuka Ramnath-led private equity (PE) firm Multiples Alternate Asset Management Pvt. Ltd has acquired a minority stake in non-banking financial company (NBFC), APAC Financial Services, said a top Multiples executive. Headed by former India chief of Deutsche Bank, Gunit Chadha, APAC has also received additional fund infusion from its founder and leadership team.
While both firms did not disclose the financial details of the transaction, two people aware of the development said, requesting anonymity, that Multiples has invested ₹250 crore in the NBFC, which began operations recently. “Another ₹150 crore has been infused into APAC by the founder and leadership team,” the first person said. He added that post the fund-raise, Multiples holds a 37% in stake in the firm. Mint had first reported on 24 May, 2018, that APAC was in talks with Multiples to raise around ₹300 crore.
As part of the deal, Nithya Easwaran, managing director, Multiples Equity will join the board of APAC.
APAC received the final approval from the Reserve Bank of India to float an NBFC in March 2018. The firm’s housing finance business, APAC Housing Finance, had received the certificate of registration from home financiers regulator, National Housing Bank, in April.
After the fund-raise, APAC’s total capital is at ₹400 crore with Chadha holding a majority stake. The NBFC, which started operations in June, is focused on affordable housing and providing credit to the under-served and under-banked micro, small and medium enterprises. APAC began disbursing affordable housing and SME loans from July and September, respectively, and has over 40 employees.
“Banks, especially public sector banks, have lending limitations of both capital and flexibility when it comes to segments like affordable housing and MSME loans. The market is, hence, wide open for entrepreneurial ventures like APAC to go and harness that opportunity in a profitable way. Combining the tailwinds offered by the macros, with Gunit’s credible track record and goodwill, and his ability to raise future rounds of funding, there is an opportunity to create at least a billion-dollar enterprise in the near future,” Ramnath, founder and managing director, Multiples, said over the phone.
She added with appropriate risk controls and significant digitization and innovation, APAC seems to be a scalable business. “We have been following APAC’s progress over the last one year and have been impressed with the leadership team’s alignment with the long-term goals of the company by their significant equity investment.”
APAC is one of Multiples early-stage investments. Multiples has also incubated and backed Vastu Housing Finance, a Mumbai-based housing finance company, where it has a majority stake.
“We wanted to have an institutional partner who provides both financial and intellectual capital to realise our vision. Both Renuka and Nithya have an admirable track-record in financial services and APAC would look to capitalize on their experiences,” said Chadha, adding a well-capitalized balance-sheet with low leverage and an experienced leadership team will be differentiating factors for a new-age NBFC in the current industry scenario.
Before founding APAC , Chadha was a member of the global group executive committee of Deutsche Bank and CEO Asia-Pacific. He had earlier served as the managing director and CEO of IDBI Bank.
Multiples, a homegrown PE firm founded by ICICI Venture chief Ramnath in 2009, has $1.1 billion in assets under management. The investment into APAC was made from its second fund. The PE firm is also in the process of raising a $750-million third fund.
“We have our commitments in place already. We are in the process of deciding the amount at which we should do our first close. It is just a matter for picking the dates,” Ramnath said. Multiples’ investments include PVR Cinemas, Arvind Fashions, Delhivery, RBL Bank and Milltec.