KFintech eyes inorganic opportunities
PremiumCEO Nadella said he will back two to three M&A deals every year with a ticket size of $10-40 mn each
Private equity (PE) firm General Atlantic-owned registrar and transfer agent (RTA) KFin Technologies Pvt. Ltd, which predominantly serves the mutual fund industry, is looking to expand its business into new asset classes and geographies through an aggressive inorganic growth strategy, as the company looks to transform itself into a technology services provider for all types of financial services business, said its chief executive and whole-time director Sreekanth Nadella in an interview.
KFintech offers end-to-end services to mutual fund investors and distributors, besides offering corporate registry, back-office operation and data processing services. It is also a central record-keeping agency for the National Pension System. In November 2018, General Atlantic had invested over ₹1,000 crore to buy a majority stake in the company from existing investors and for fresh capital infusion.
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“We have got a very aggressive M&A (merger and acquisition) strategy. We recently invested in an insurance-tech company, where we currently do not have a presence, but it is something we are very passionate about. And we are looking for more in a series of spaces, which are complementary to the work that we render, which could be fund administration, fund accounting or in the tech space, such as big data and analytics platforms. So, there are a series of institutions we are looking at both in India, as well as abroad, in the countries that we operate," Nadella added.
Nadella said he will back two to three M&A deals every year with a ticket size of $10-40 million each.
In May, KFintech picked up a 17% stake in Artivatic.ai for an undisclosed amount to enter the insurtech space. “The capabilities that we are looking at from an M&A standpoint is basically split into three buckets. So, one strategy is to gain the depth in terms of what we are already doing, acquire other businesses who are exactly in the same line of business, but which helps us consolidate the market. That is largely is going to be a play for me in two verticals—one, mortgages, second is issuer services," said Nadella.
“Then we talk about incidentals and ancillaries, which will improve the bouquet of services that we offer today. As a registrar and transfer agent, we are largely rendering services, which focus on the liability side of any asset management company, liabilities here being the unit holders. But fund administration is an area we are currently not at. So that is one area that we will obviously be interested in."
KFintech wants to expand geographically, especially in the South-East Asia. “We operate in about five countries, and there are three more countries where I really want to get into, and one way to do it is do an M&A in that part of the world. So that M&A is to establish a geographical presence, largely in the same space we currently operate in," said Nadella, adding that the firm’s M&A strategy will see it focus on acquiring technology platforms and talent through acqui-hiring.
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