A consortium of private equity investors has joined together to invest INR 5 billion ($80 million; €74 million) in Magma Fincorp, an India-based non-deposit taking non-banking finance company, according to a joint statement.
The group includes existing investor Kohlberg Kravis Roberts (KKR), India Value Fund Advisors and Leapfrog Investments, which will invest INR 0.8 billion, INR 2.2 billion and INR 2 billion respectively. KKR made its initial investment in 2011.
Magma intends to use the new capital to expand the business as India’s macroeconomic outlook improves, according to the statement.
“KKR has been a committed partner to Magma since our original investment. As the Indian economy continues to recover, it has reaffirmed our confidence in the longer-term Indian growth story. We continue to believe that rural and semi-urban financial inclusion will be a key element of this growth and Magma is a unique platform that can actively drive this financial inclusion,” Sanjay Nayar, chief executive of KKR India, said in a statement.
As well as pure financial investors, India’s financial services sector has been appealing to a number of development-focused firms, including the likes of the International Finance Corporation and UK development finance organisation CDC Group.
Partner at social impact investment fund Leapfrog, Michael Fernandes, added, “Millions of people in India would like to start a business, or plant a new crop, or send their children to school rather than to work. The Indian rural population wants to grow and that’s where Magma has been working for the past two and half decades.
“The proposed investments will provide Magma with strategic capital and will enable the company to expand its footprint deeper into these untapped markets, thereby contributing to financial inclusion in India.”