Creador and Morgan Stanley Private Equity have led a Rs. 300 crore funding round in non-banking financial company (NBFC) Kogta Financial. After the first investment of Morgan Stanley Private in November 2018, Kogta scaled up operations across eight states, with a sharp focus on asset quality and ALM.
The investment in Kogta Financial is the latest by Brahmal Vasudevan-led Creador in India’s broader financial services sector. Creador had earlier backed Cholamandalam Investment and Finance Co and holds a stake in Bengaluru-headquartered Ujjivan Financial Services.
This is the second investment in the company since the last one year the reason being the trust and comfort of the investors on the working method, efficiency and potential of the company’s business model.
The Series-C round comes post another funding round where Pramod Bhasin-led Clix Capital also raised $40 million in fresh financing, led by its largest stakeholder, AION Capital.
Since past few years, Kogta has expanded its branch network significantly and has augmented its second-line of management team and borrowing relationships. The company will now use the funds for expansion and thus gain more profits.
This investment has increased the total amount of funds that the company owns and this has contributed to positive asset liability management and surplus liquidity on the balance sheet of the company.
The retail NBFC, which focuses on financing used and commercial vehicles, cars and tractors, as well as loans to SMEs, claims to serve about 30,000 customers, and has a loan book of about Rs 825 crore.
The company has demonstrated strong scale-up since the new team took over in 2008, while prudently managing risks, especially in the challenging used commercial vehicle space. With continued focus on secured retail lending, presence in high growth markets, robust IT system and collections mechanism, Kogta is uniquely positioned to thrive in the Indian financial services sector,”
Anand Narayan, managing partner at Creador Advisors India, said.
The company was founded in 1996 and is based in Jaipur. Kogta offers financing for used and new commercial vehicles, cars and tractors along with loans to MSME segment, serving over 30,000 customers.
Kogta operates 105 branches across 8 states in central and west India which includes Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Delhi, Punjab, Haryana, and Uttar Pradesh.
The startup has scaled-up largely since its new team took charge in 2008. The company faced risks in the challenging used commercial vehicle space. With continued focus on secured retail lending, presence in high growth markets, strong IT system and collections mechanism the company seeks to absorb the investment in these areas.
The startup had first onboarded IIFL Seed Ventures as its first institutional investor which till date has put in about $10 million into the company since its first investment in 2016.
According to KPMG, there are about 46 million micro, small and medium enterprises across various industries, employing 106 million people. Overall, the MSME sector accounts for 45 percent of the industrial output and 40 percent of exports.