KKR India Financial Services Pvt Ltd, lending arm of global private equity fund KKR, is reworking its fund raising strategy.
It plans to raise up to Rs 500 crore through non- convertible debentures to fund the credit business. Rating agency CRISIL has assigned an 'AA stable' rating to the offering.
KKR India Finance commenced operations in 2009. It focuses on wholesale lending, including promoter financing and mezzanine and acquisition financing. It has comfortable capitalisation, with a net worth of Rs 1,250 crore as on September 30 and no debt. The parent holds 49.8 per cent stake.
The company has a conservative leverage philosophy, with gearing unlikely to exceed 2.5 times over the medium term. Steady accruals to net worth support its capitalisation. The comfortable capitalisation cushions the company against asset quality challenges inherent in the business, said CRISIL.
The rating is underpinned by KKR India Finance's strong linkages with KKR, and the ultimate parent's management control, plus the shared brand name. These rating strengths are partially offset by the vulnerability of KKR India Finance's asset quality to sizable single-borrower exposures and their impact on the company's profitability.
Its scale of operations in the country is moderate.
According to CRISIL, till end-September, KKR India Finance had invested in deals aggregating Rs 2,400 crore, of which exposures of Rs 1,020 crore are in the company's books.
It has established sound risk management systems and processes to help structure and manage these exposures. It maintains appropriate collateral cover against exposures in the form of promoter-owned shares and real estate. However, its asset quality remains exposed to the risk of potential slippage in large exposures that could result in a sharp increase in delinquencies, especially in the event of stress in the economy.
Its gross non-performing assets were Rs 50 crore as on March 31 against nil a year ago, mainly because of slippage in a single account, the rating agency added.
It plans to raise up to Rs 500 crore through non- convertible debentures to fund the credit business. Rating agency CRISIL has assigned an 'AA stable' rating to the offering.
KKR India Finance commenced operations in 2009. It focuses on wholesale lending, including promoter financing and mezzanine and acquisition financing. It has comfortable capitalisation, with a net worth of Rs 1,250 crore as on September 30 and no debt. The parent holds 49.8 per cent stake.
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The company's capitalisation has been supported by regular capital infusions over the past five years. The most recent was in June, from partner investors in KKR’s fund, as the second tranche of funding estimated at $100 million. The first tranche came in August 2013.
The company has a conservative leverage philosophy, with gearing unlikely to exceed 2.5 times over the medium term. Steady accruals to net worth support its capitalisation. The comfortable capitalisation cushions the company against asset quality challenges inherent in the business, said CRISIL.
The rating is underpinned by KKR India Finance's strong linkages with KKR, and the ultimate parent's management control, plus the shared brand name. These rating strengths are partially offset by the vulnerability of KKR India Finance's asset quality to sizable single-borrower exposures and their impact on the company's profitability.
Its scale of operations in the country is moderate.
According to CRISIL, till end-September, KKR India Finance had invested in deals aggregating Rs 2,400 crore, of which exposures of Rs 1,020 crore are in the company's books.
It has established sound risk management systems and processes to help structure and manage these exposures. It maintains appropriate collateral cover against exposures in the form of promoter-owned shares and real estate. However, its asset quality remains exposed to the risk of potential slippage in large exposures that could result in a sharp increase in delinquencies, especially in the event of stress in the economy.
Its gross non-performing assets were Rs 50 crore as on March 31 against nil a year ago, mainly because of slippage in a single account, the rating agency added.