InCred and KKR have completed the strategic merger of InCred Financial Services (InCred Finance) and KKR India Financial Services (KIFS). The combined business entity, which will operate under the brand name ‘InCred Finance’, will have a balance sheet of $600 million and an equity base of $300 million. It will be managed by Bhupinder Singh, who founded the InCred Group in 2016.
“The closure of the transaction creates a leading Indian non-banking finance company with the enhanced resources to better meet the needs of retail borrowers and micro, small and medium enterprises (MSMEs). InCred Finance’s combination with KIFS meaningfully adds to the equity base of InCred Finance and strengthens its ability to accelerate growth and gain market share in the retail and MSME lending space,” according to a statement.
The KKR-InCred merger was announced in August 2021 in an all-stock deal after more than a year of discussions. After the merger, KKR, along with two other investors in KIFS (Teacher Retirement System of Texas and Abu Dhabi Investment Authority), will together hold a 35 per cent stake in the merged entity InCred Finance. KKR alone will hold about 15-16 per cent in the consortium.
It added that the merger reaffirms the strength and quality of the retail lending platform built by InCred Finance, which has a sharp focus on strong risk-management and collections practices and incorporates innovative technology solutions to enhance operational efficiencies.
Bhupinder Singh, founder and CEO of InCred Group, said, “InCred Finance’s business has emerged in great shape from the pandemic delivering top-notch risk performance. The strategic partnership with KKR significantly accelerates our ability to deliver our class-leading offerings at a large scale and to capitalise on the enormous credit opportunity in India.”
After the merger, Singh will hold 26 per cent in the combined entity, while about 11 per cent will be held by Ranjan Pai and nearly 2 per cent by Anshu Jain, via InCred’s holding company Bee Finance. The stake of Bee Finance Ltd. (Mauritius), the promoter entity of InCred, will be diluted to about 40 per cent, from about 60 per cent.
InCred Finance, which was founded in 2016, is a new-age lending institution that spans online and offline models across consumer lending, small business lending and education finance. It has focused on building deep moats in the businesses it operates in with its loan book touching $500 million. With a CRISIL Rating of A/Watch Positive, InCred Finance is backed by marquee global and domestic investors such as INVESTCORP, OAKS, Moore Capital, Elevar Equity, Paragon Partners, Anshu Jain, Ranjan Pai, and Gaurav Dalmia, among others.
Gaurav Trehan, partner and CEO of KKR India, said, “This merger combines the strengths of InCred Finance and KIFS to create a market-leading lending platform with the enhanced resources and expertise to meet the diverse funding needs of Indian customers. KKR is pleased to remain involved with the business as a strategic partner, and we look forward to embarking on this next phase alongside Bhupinder and the broader InCred Finance team.”
InCred Finance is a strategic investment for KKR and is not a portfolio company in a KKR fund.
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