Mumbai: Canadian asset manager Brookfield Asset Management is investing ₹1,450 crore in Everstone Capital-backed lender IndoStar Capital Finance Ltd, according to the lenders filings with stock exchanges.
The investment will mark Brookfield’s entry into a consumer lending business in the country, having previously run only structured finance book with real estate forming majority of the loans. Apart from it’s real estate loans, IndoStar also has housing finance and commercial vehicle finance businesses.
Brookfield will invest ₹1,225 crore in the form of primary capital, while the rest will be used to buy existing shares of IndoStar from its promoter entity IndoStar Holdings Mauritius.
Of the ₹1,225 crore primary investment, ₹875 crore will be in the form of equity shares and the remaining ₹350 crore will be through compulsorily convertible preference shares. The equity shares will be issued at a price of ₹290 per share.
On Friday, shares of IndoStar closed at ₹282.5 per share, up 4% on the BSE.
Across these two, Brookfield will end up holding a 31.2% stake in IndoStar, which will go up to 40% through the secondary purchase of shares and an open offer to public shareholders.
Brookfield will also become a co-promoter in IndoStar and nominate two board members. R. Sridhar will continue to lead the company in his role as Vice Chairman and CEO, IndoStar.
The fresh investment by Brookfield will support the continued growth of IndoStar’s retail business.
“We see opportunities to continue delivering substantial value to IndoStar’s customers, employees and investors. We have built a top-quality business in IndoStar and are excited for its next phase of growth,” said Dhanpal Jhaveri, Chairman, IndoStar and Vice Chairman, Everstone India
IndoStar has assets under management of ₹10,600 crore and offers a wide range of loans to nearly 60,000 customers.
“We believe in the long-term secular growth runway of the Indian retail financial services sector. IndoStar has an experienced management team and a strong position in attractive and growing retail lending segments,” said Aditya Joshi, Senior Vice President, Brookfield.