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September 28, 2016

Retail lending NBFCs emerge as a sweet spot for PE investors: Mint

A Mint article titled Retail lending NBFCs emerge as a sweet spot for PE investors quotes Venture Intelligence data on PE/VC investments & Exits in the NBFC space:

There have been 11 transactions worth $750 million involving NBFCs so far this year, according to data compiled by investment tracker Venture Intelligence. This follows $920 million that PEs invested in NBFCs last year.
In 2016, PEs have been able to sell investments in five deals worth $432 million, according to Venture Intelligence. It was $539 million across 11 deals in 2015. 
Why are PE firms chasing NBFC companies?

More excerpts from the article:
"Typically, it is considered a proxy for economic growth. PE funds believe that we are at the start of a four to five year good run in terms of economic growth. As a fund, they would want to enter and exit within the growth cycle... the delinquency is low. Margins too are better compared to wholesale lending businesses." - Sanjeev Krishnan, Partner(Transaction Services), PwC India
In July, the International Monetary Fund predicted that the Indian economy will grow at 7.4% in 2016-17, faster than the Chinese economy’s growth pace of 6.6%. Outstanding retail loans as of 22 July were Rs14.48 trillion, up 18.8% from a year ago, according to latest data available from the Reserve Bank of India. Some of the fastest growing categories were loans for consumer durables (18.4%) credit cards (29.4%) and personal loans (27.9%). 
Changing demographics and low credit penetration have made NBFCs attractive - Prakash Nene, Partner, Multiples PE.
Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.