[Funding alert] IndoStar Capital Finance raises Rs 1,225 Cr from Brookfield

Non-banking financial player IndoStar Capital Finance on Wednesday said it has raised Rs 1,225 crore equity capital from Brookfield, an alternative asset manager.

The investment by Brookfield in the retail-focused NBFC is a combination of primary investment in equity shares and compulsorily convertible preference shares (CCPS).

With this investment, Brookfield will become a co-promoter with 24.6 percent stake, along with IndoStar Capital Mauritius having 45.2 percent holding at present.

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"This investment is a strong endorsement of IndoStar's business model, management capability, and quality of its franchise. This investment not only provides equity funding but also access to new debt financing via Brookfield's relationships with financial institutions," Indostar's Executive Vice-Chairman and CEO, R Sridhar, said in a release.

Brookfield will also invest Rs 225 crore through a secondary purchase of shares from IndoStar Capital Mauritius.

Post this infusion, IndoStar's capital adequacy ratio has improved to almost 40 percent compared with 27 percent before this equity infusion, the release said. This is the first private equity deal by Brookfield in the financial services space in the country.

IndoStar has assets under management of around Rs 10,200 crore, and has nearly 70,000 customers.

A scheduled commercial bank Suryoday Small Finance Bank (SSFB), which provides microfinance loans to customers, has also closed an equity funding in the month of May 2020. The bank has raised Rs 62.14 crore from existing investors, including Gaja Capital, Kotak Life, Lok Capital, TIAA, and Kiran Vyapar. 

Till now, SSFB has opened around 400 accounts, and the target is to do a full-fledged launch from two branches — one in Tamil Nadu and another in Odisha. It will expand to 100 branches within the next one month.

Another micro-lending company Satya MicroCapital Limited has raised Rs 105 crore in equity funding by Gojo & Company, Inc. This is one of the first investments in the microfinance sector after the nationwide lockdown.

(Disclaimer: Additional background information has been added to this PTI copy for context)