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Mumbai/Hyderabad: South India based NBFC, IKF Finance, raised INR 2.5 bn in a funding round led by Accion’s Digital Transformation Fund. Incorporated in the early 1990s by MR VGK Prasad, the used vehicle, housing and MSME financier is backed by MO Alternate Investment Advisors (“MO Alts” or “MO Alternates”), which invested in the company in 2015. Global impact fund Accion anchored the funding round with INR 1.2bn and balance was raised from other investors, which includes marquee HNI / family offices. The investment is made from Accion’s Digital Transformation fund, focused on investing in large, scaled financial service providers for growth equity and investment in digital transformation.

Since MO Alts’ investment, IKF has evolved into a multiproduct financier with diverse capabilities across commercial vehicle loans, MSME finance and affordable housing loans. IKF is amongst the few lending companies to have demonstrated consistent growth and profitability across economic cycles. Despite Covid and other macro headwinds, IKF has generated strong growth of 40%+ over the past few years with steady ROEs of ~14%.  In 2017, the Company incubated a housing financing subsidiary which has grown at a steep CAGR of 60%+ to scale up to a meaningful INR 7 bn in a very short span of time.  As on March 2023, Company has a consolidated AUM of ~INR 32 bn with a network of ~200 branches spread across Andhra Pradesh, Telangana, Gujarat, Tamil Nadu, Maharashtra, Rajasthan, etc.

Mrs. Vasumathi Koganti, Promoter & MD of IKF Finance said, “We are excited to partner with Accion, especially since IKF is Accion’s investment through its Digital Transformation Fund. With over three decades of experience in asset financing, we have built a robust foundation in terms of our geographic presence, diversified product portfolio and customer segments, strong credit and risk assessment framework, well-established systems and processes, and integrated technology platforms. Over the past few years, jointly with our key stakeholder Motilal Oswal Alternates, we have been setting up the building blocks of a massive transformation aimed at delivering best in class growth and profitability on a sustainable basis. We believe that our digital strategy is expected to play a pivotal role in enabling this transformation and along with Accion’s Digital Transformation Fund we will now have the opportunity to leverage the experience that Accion has in creating value for financial institutions in emerging markets through various interventions.

Vasantha, Promoter & MD of IKF Home Finance added “This capital will support the Company’s growth ambitions by deepening and expanding our distribution network across chosen geographies. The housing opportunity in India is so massive that this business could be as large as our vehicle finance business very soon”

Mr. Vinit Mehta, Director and Head of BFSI at MO Alts commented, “As the first institutional investor in the Company, we have seen it evolve into a successful multi product lender while maintaining best in class performance despite macro disruptions. We continue to believe in the vision set by Vasumathi and Vasantha on the back of strong foundation laid by Mr Prasad. The brand has grown from strength to strength under their leadership. With operating vintage of over three decades, a strong professional management team, and sheer size of lending opportunity in India, IKF is uniquely positioned to become a leading retail financial institution in the country. We welcome Accion and look forward to working with them to support IKF in its growth journey.”

Unitus Capital acted as the financial advisor on the transaction. 

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