Capital First plans to raise $30 mn via PE

Publicly-held non-banking financial company Capital First (formerly Kishore Biyani-controlled Future Capital) is planning to raise $30 million through the private equity (PE) route.

In June, Biyani had sold the business to global PE major Warburg Pincus, which subsequently launched an open offer for it. So far, it has spent about Rs 800 crore, acquiring 68 per cent in the company. It has retained the management team led by V Vaidyanathan.

Just a few weeks after completing the open offer, the Capital First management is understood to have held discussions on further equity infusion. “It is understood the company’s management is looking at a sum of $30 million and the move is expected in April 2013,” a PE sector official told Business Standard.

However, the management of Capital First denied any such move.

Capital First has loan assets of Rs 4,420 crore and its net non-performing assets stand at 0.04 per cent of the total. For the quarter ended September, net interest income stood at Rs 57 crore, eight per cent more than in the corresponding period last year. Net profit, however, fell 36 per cent to Rs 18 crore. The company’s net worth is Rs 980 crore.

The company focuses on loans to micro, small and medium enterprises. It is also looking at increasing its share in the retail space by offering gold loans, consumer durable loans, two-wheeler loans, secured wholesale loans and wealth management and broking services. The move by Capital First to look at PE funding comes at a time when the flow of PE funds into the banking and financial services sector has been declining.

PricewaterhouseCoopers says though the banking, financial services and insurance (BFSI) sector is third in terms of investment value (about $200 million of investment) and second in terms of the number of deals (12 deals in the third quarter), the investment value has fallen 32 per cent.

Major deals in this segment in the recent past include International Finance Corporation’s $75-million investment into Religare Enterprises and the $41-million infusion by Carlyle-Multiples into South Indian Bank.

The sector, however, saw healthy exits for PE players. “The BFSI sector topped the list for PE exits in terms of volume, with six deals worth $113 million, accounting for 23 per cent of the total deal exit volume. In the previous quarter, the sector did not see a single exit,” PricewaterhouseCoopers said in its report.

The exit of ChrysCapital and ICICI Venture from Shriram City Union Finance in a $70-million deal was among the major exits in the quarter.