KKR-backed InCred Financial plans to list in 1-2 years

 

Mumbai: Private equity firm KKR-backed InCred Financial Services Ltd is looking at an initial public offering (IPO) of ₹5,000 crore over the next 1-2 years, according to founder and group chief executive officer Bhupinder Singh.

In an exclusive interview with Mint, Singh said the capital-raise will happen once KKR, which holds 13.4% stake in the company, agrees to exit in the IPO. In 2022, InCred Finance and KKR India Financial Services merged to create a joint entity under the brand name InCred Financial Services.

“We have more than enough capital to support our current growth plans. Listing is on the horizon, likely within 1-2 years, and we could potentially explore a ₹5,000 crore IPO," Singh said. “We have significant permanent capital, including my own. So far, we've successfully raised all the capital we’ve needed, precisely when we’ve needed it, in the private markets."

In May this year, the Economic Times had reported that Japanse bank Mizuho is in talks to acquire KKR's stake in InCred. Singh, however, dismissed the report.

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Singh, who was earlier the co-head of banking and markets for Asia Pacific at Deutsche Bank, started InCred Finance in 2017. He is the largest individual shareholder with 18.9% stake in the company. Other shareholders include Ranjan Pai (10.7%), Teacher Retirement System of Texas (9%) and OAKS Asset Management (7%).

In a span of six years, the non-banking financial company (NBFC) has grown its assets under management to nearly ₹10,000 crore, with a focus on personal, education and small business loans. During these years, InCred set up the lending business InCred Finance, institutional, wealth and asset management platform InCred Capital and digital investment distribution platform InCred Money. Singh explains that the long-term plan is to build the next Bajaj Finance.

“Currently, we offer 7-8 products in the retail and MSME segments, whereas Bajaj offers 40 to 50. With our current loan book at ₹10,000 crore, we can grow this to ₹15,000 crore using our existing suite of products. To take us from ₹15,000 crore to ₹20,000 crore, we’ve identified loans against property (LAP) as a key growth area and have expanded our local footprint to over 100 branches to accelerate this initiative," he said.

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In March this year, InCred Finance received a rating upgrade with Crisil raising rating to AA- from A+.

Net profit of InCred Financial Services rose 80.69% to ₹90.13 crore in the quarter ended March 2024 as against ₹49.88 crore in the previous quarter. Capital adequacy stands at 33%. The company sources loans through direct lending which constitutes 85% of the assets under management, whereas the co-lending book contributes around 15% .

The IPO market has been on fire over the last five years, with 45.5% of IPOs across both the mainboard and SME segments being oversubscribed by more than 10 times in the retail segment. In 2024, retail subscription reached an all-time high this year. Bajaj Housing Finance, Northern Arc, Bajaj Housing Finance are the latest to hit the market this year. HDB Financial Services, Tata Capital, Avanse Financial Services and HDFC Credila are expected to come out with their IPOs later this year and next.