Two sources said discussions with Warburg are on for a 30% stake in the shadow lender. A source said the deal is in the final stages of negotiations and the cost of the expansion will be around $450 million.
Businesses such as Vistara in India operate as non-banking financial services companies (NBFCs), lending smaller amounts than traditional banks and targeting customers mostly in towns and villages.
As of March 2021, India’s NBFC sector had assets worth over Rs 54 trillion ($680 billion). Its growth in recent years has attracted investors including Sequoia Capital and KKR & Co.
Vistara is already backed by India’s Sama Capital and Westbridge Capital. this and warburg Reuters declined to comment on questions.
Indians Kotak Mahindra Capital is advising the expansion to negotiate a private equity deal. The investment bank did not respond to a request for comment.
“NBFCs are one of the biggest sectors for PE funds and have a proven track record of performance,” said the first source, explaining Warburg’s justification for interest.
Established in 2010, Vistaar provides small business loans to shops, mills, hotels and manufacturers. According to its website, it operates 196 branches in 12 Indian states and has disbursed more than $300 million in loans to date.
It says it typically extends business loans of $1,200 to $60,000 for five to 10 years.
The first source also said that, in addition to the fresh shares being issued by Vistara, Warburg could acquire shares of existing investors, although it was not yet clear which of them could exit.
For the fiscal year to March 2022, Vistara reported a net profit of $9.3 million, up 14.5% from a year ago, according to the credit rating firm. execution, Its total income during this period was $54 million.
Reuters reported last year that Warburg was in talks to raise $16 billion from investors for its latest flagship global private equity fund, its largest ever.
Over the past two decades, Warburg has invested more than $5 billion in India.
Its recent investments include startups and consumer brands such as earphone-maker boAt, beauty and makeup firm Good Glam Group and ride-hailing app Ola. Warburg’s NBFC stakes in India include education sector lenders Avanse Financial Services and Fusion Microfinance.