Mumbai: UK-based private equity firm Actis is setting up a non-banking financial services company (NBFC)—Profectus Capital—that will lend to small and medium enterprises, the PE firm said in statement.
Actis plans to fund the platform with up to $220 million of equity capital over a five-year period.
The PE fund is backing a team led by former CEO of Reliance Commercial Finance K.V. Srinivasan. Profectus Capital will exclusively focus on lending to SME businesses operating in a dozen targeted subsectors.
“We are looking to build a high quality, professional and successful institution focused on the core of the fast growing Indian economy, its SME sector. We are really privileged to work with K.V. and his team who have a stellar track record building a high quality business in the sector,” said Asanka Rodrigo, partner and head of South Asia at Actis.
India has a deep culture of small family businesses with over 30 million SMEs and the sector is experiencing secular growth in demand for credit, Actis said.
The commitment to Profectus Capital follows Actis’ recent investment in India’s largest digital retail payments platform Pine Labs.
In March, Mint reported that Pine Labs raised $82 million in an investment round led by Actis Capital, along with Altimeter Capital.
“SMEs are a vital cog in the Indian economy and have a huge unmet demand for capital. We believe that NBFCs are best placed to serve this demand in the most efficient manner. We sought out an experienced management team and had a meeting of minds with K.V. who shared our vision and values,” said Pratik Jain, director at Actis.
“Actis has developed unparalleled expertise in financial services sectors with investments in banks, NBFCs, payments and wealth management businesses across growth markets. In India, Actis has played a significant role in building successful lending institutions before. It was a 26% shareholder in UTI Bank (now Axis Bank) and a founding investor in IDFC,” the statement said.
Actis has also invested in other sectors in India by creating platforms run by professional managements.