Warburg Pincus to invest $50 mn in AU

Feburary 13 2012


Warburg Pincus India Pvt. Ltd. will invest $50 million in AU Financiers (India) Pvt. Ltd., a Jaipur-based non-banking financial company (NBFC), providing a parital exit to Motilal Oswal Private Equity Advisors Pvt. Ltd., two people with knowledge of the matter said.

The transaction is in the final stages of documentation, both persons confirmed. "We are a fund and have to exit some day. Besides, we had to return some money to our investors and have got an attractive proposition." confirmed a Senior Motilal Oswal Offical. The fresh money will be used for company expansion in existing and otehr geographies, besides plans to enter housing finance. A Motilal Spokesperson declined comment.

Incorporated in 1996, promoters hold less than 50% in AU Financiers while private equity (PE) investors have a majority. The company offers commercial vehicle and car loans, small and medium enterprise (SME) loans, and loans against property. Operating in the semi-urban and rural segments, the NBFC has 141 branches across Rajasthan, Maharashtra, Gujarat, Goa, Punjab, Madhya Pradesh and Chhatisgarh, according to its website.

The International Finance Corporation (a member of the World Bank Group), Motilal Oswal Private Equity and other promoters infused Rs. 60 crore into the NBFC in the second round of funding in 2010. AU raised Rs. 20 crore in the first round of funding in 2008, which came from Motilal. The Company had been in talks with Carlyle India Advisors Pvt. Ltd. and a few other funds, Mint had reported on 2nd February.

Ernst and Young Pvt. Ltd. is the financial adviser to the company. Ladderup Corporate Advisory Pvt. Ltd. is an adviser to the promoters. AU Financiers spokesperson said the the Company did not want to divulge any details of the transaction and company financials at this point in time. A Warburg spokesperson declined to comment.

"We were not willing to go beyond a certain investment," said an official from anther PE firm that had examined the assets of the company. The official declined to be named.

Au Financers profit rose three-and-a-half time to Rs. 42 crore on a total income of Rs.159 crore in fiscal year 2011, reported domestic ratings agency Credit Analysis and Research Ltd. For the first quarter of the current fiscal year (April-June 2011), profit increased 133% to Rs.7 crore from the year earlier. Total income rose to Rs. 49 crore from Rs.19 crore, according to the report.

NBFCs have seen increasing interest from PE funds. In 2011, 34 investments worth $691.76 million were made in NBFCs compared with 33 transactions worth $267.35 million in 2009.