The capital infusion will be in form of the compulsory convertible preference shares and would be the second equity investment in Reliance Finvest Ltd (RFL) in quick succession after Avigo Capital invested Rs 150 crore in November 2011.
While the company did not specify the quantum of shares being acquired by Jacob Ballas Fund, the sources had earlier said that the investment corresponds to a five per cent stake, assigning a Rs 4,000 crore valuation to Religare Finvest.
Commenting on the development, Religare Enterprises' Group CEO Shachindra Nath said that the investment (by Jacob Ballas) "is not only an external endorsement of the operating model but also demonstrates that despite macro headwinds in challenging times there are value seeking investors for fundamentally strong business models."
"Our NBFC, led by a strong leadership team over the last three years has created an unique MSME focused operating model backed by strong underwriting capabilities.
"This move also positions us well to capitalize on the existing business opportunities while delivering superlative value for all our stakeholders. We welcome Jacob Ballas to the Religare family," he added.
Religare Finvest provides debt capital to MSMEs (micro, small and medium enterprises) in form of loans against property, working capital loans, loans against plant and machinery, vehicles and construction equipments and loan against marketable securities,, among others.
The company has more than 25,000 MSME accounts and its loan book stood at Rs 11,380 crore as on September 30, 2011.
The PE funding is expected to help the company meet its growing capital requirements.
The deal comes at a time when various regulatory changes are taking place in the non-banking financial sector. Besides, a continuous rise in interest rates has also put pressure on the business margins for the NBFC sector, while the shares of listed companies have been hurt badly in recent months.
Jacob Ballas Fund is advised by Jacob Ballas Capital India Private Limited, a leading private equity advisor with a 19-member team, advising three India-focused Mauritius based private equity funds.
Investors in the Funds comprise predominantly leading international institutions such as insurance companies, sovereign wealth funds, pension funds, banks, funds of funds as well as reputed international family investment offices.
The Funds have generated ten liquidity events from its portfolio including full and partial exits.