TPG Growth leads $42-million equity investment in Ess Kay Fincorp

TPG Growth, a middle-market and growth equity platform of alternative asset firm TPG, has led a $42-million (Rs 3 billion) equity investment in Ess Kay Fincorp, a non-banking finance company.

The latter entity primarily finances income generation activity for the commercial vehicle segment and small businesses. 

Existing investors Norwest Venture Partners and Evolvence India Fund-II are investing with TPG Growth. The terms were not disclosed. Spark Capital was the only financial advisor on the transaction.

Founded in 1994 by Rajendra Setia, a first-generation entrepreneur, Ess Kay Fincorp commenced as a two-wheeler financier in Rajasthan. It is now at 250 locations across Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Punjab and Haryana, servicing mostly low-income and self-employed people.

According to reports, it has 124,000 customers, with a loan book of at least Rs 20 billion; the company is aiming at a loan book of Rs 25 billion by March and Rs 60 billion by 2022.

“With its differentiated business model, supported by a direct-sourcing network, hands-on approach to underwriting, quick turnaround and robust collection mechanism, Ess Kay Fincorp has demonstrated a unique advantage and opportunity in a difficult-to-serve category,” said Gaurav Trehan, partner at TPG.
 

Traditional underwriting methods in India exclude a majority of creditworthy individuals and small and medium enterprises. Our partnership driven approach in focus geographies has led us to establish a business model that directly addresses the needs of our customers, said Setia, managing director at Ess Kay.

Till date, Esskay has raised two rounds of funding, one of Rs 180 million in 2012 from BanyanTree Growth Capital and another of Rs 2 billion from US-based Norwest Venture Partners, Baring Private Equity India and Evolvence India in January 2018. 

BanyanTree, which held 25 per cent stake in Ess Kay, sold it all in the latest round, suggest reports.