Kogta Financial, a retail non-banking financial company (NBFC), on Wednesday, announced that it has raised Rs 300 crore ($42.25 million) in its Series C fund raise, led by Creador IV LP along with Morgan Stanley Private Equity.
Arun Kogta, MD and CEO of Kogta, said,
“We have built the company with the right mix of product, profile, and geography diversification along with a focus on better asset quality and IT systems. The experienced team at Creador will help us further strengthen our systems and processes as we progress towards becoming a world class institution. We hope to continue on our growth trajectory and increase penetration across chosen geographies without compromising on credit quality."
Founded in 1996, Kogta offers financing for used and new commercial vehicles, cars and tractors, along with loans to MSME segment. The Jaipur-based NBFC operates 105 branches across eight states in central and west India, serving over 30,000 active customers.
It operates across Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Delhi, Punjab, Haryana, and Uttar Pradesh. As of September 30, 2019, the company had a loan book of about Rs 825 crore ($117 million).
Speaking on the fund raise, Varun Kogta, Executive Director and CFO, Kogta said,
“This is the second investment in the company in the last one year, which clearly is a testament to the comfort of equity investors on the operational efficiency and scalability of the business model of the company. This investment has substantially increased the net owned funds and has contributed to positive asset liability management (ALM) and surplus liquidity on the balance sheet of the company.”
During the last few years, the NBFC has significantly expanded its branch network and has augmented its second-line of management team and borrowing relationships. It is now poised to reap the benefits of this expansion post the fresh fund infusion.
Arjun Saigal, Co-head of Morgan Stanley Private Equity Asia in India said, “Post our initial investment in November 2018, Kogta has scaled up operations across eight states, with a sharp focus on asset quality and ALM. We look forward to participating in the company’s next phase of growth.”
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.
“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," Anand Narayan, Managing Partner at Creador Advisors India added.
Amit Mehta, Principal at IIFL Asset Management Ltd., a Series A investor at Kogta said, “As the first institutional investor in the company, we backed a strong credit culture and believed in the team's execution capability to capture the opportunity in vehicle finance and MSME space.”
(Edited by Suman Singh)