Brookfield invests ₹1,225 crore in IndoStar

NBFC to get access to debt financing

Brookfield Business Partners L.P., along with its institutional partners, has invested ₹1,225 crore in Indostar Capital Finance Ltd., a non-banking financial company (NBFC) promoted by Everstone Group.

With the infusion of over ₹860 crore through equity and the balance through compulsorily convertible preference shares, Brookefield is set to become a co-promoter along with IndoStar Capital Mauritius and will have the ability to nominate two members on the board. Everstone Group, with about 24% stake, has two directors on the IndoStar board.

“This is the first private equity deal by Brookfield in the Indian financial services space. Brookefield will get an equity stake of over 24.6% in IndoStar and this will eventually go up to 40%. The infusion will also trigger an open offer, which would be launched during June/July after receiving regulatory approvals,” said Amol Joshi, CFO, IndoStar Capital Finance Ltd.

“This is truly a transformational investment for IndoStar. We are excited to partner with Brookfield and Everstone Group to accelerate our retail lending strategy across vehicle Finance, SME finance and affordable housing finance. This investment not only provides equity funding, but also access to new debt financing via Brookfield’s relationships with financial institutions,” said R. Sridhar, executive vice-chairman and CEO, IndoStar Capital Finance Ltd.

“IndoStar has assets under management of around ₹10,200 crore and offers a wide range of loans to nearly 70,000 customers. The raising of funds during the crucial time like Covid-19 speaks about the company’s strength,” said Mr. Joshi.

With this infusion, IndoStar’s capital adequacy ratio improves to almost 40%. It will also enable the company to further accelerate its retail lending strategy in a challenging market environment and equips it with the ability to use capital for both organic and inorganic growth, said the company in a statement