International Finance Corporation (IFC) plans to make a debt investment of up to $150 million (Rs 1,068 crore) in Bajaj Finance Ltd in its second funding deal with an Indian non-banking financial company (NBFC) this week.
Bajaj Finance will use the proceeds for lending to small and medium enterprises (SMEs) in low-income states, the World Bank’s private-sector investment arm said in a disclosure.
In addition, Bajaj Finance will match IFC’s investment by contributing up to $450 million from its own balance sheet.
The disclosure comes just days after IFC said it would help non-bank lender Shriram Transport Finance Company Ltd raise $200 million by securitising its assets.
At present, Bajaj Finance’s business segments comprise consumer (40%), mortgage (28%), SME (13%), commercial (11%), and rural (8%).
As of December 2018, it had total assets under management of around $15.56 billion across more than 32.5 million customers.
The Bajaj Group holds stake in Bajaj Finance through Bajaj Finserv Ltd, a holding company for its financial services businesses. Bajaj Finserv owns 54.9% of Bajaj Finance.
According to the IFC disclosure, the MSME sector is critical for the development of the country as it accounts for over 45% of India's exports while generating employment for 40% of the workforce. Over 70% of India's unbanked population lives in low-income states.
Bajaj Finance reported a revenue of Rs 13,288 crore with a net profit of Rs 2,647 crore in the financial year 2017-18,
Annapurna Finance Pvt. Ltd, another non-bank lender targeting low-income states, said earlier this month that it had raised Rs 137 crore ($19.1 million) in equity funding from multilateral lender Asian Development Bank (ADB) to grow its loan book.
