Indian billionaire Azim Premji’s investment arm Premji Invest has acquired a 9.7% stake in TVS Credit Services Limited, the financing unit of two-wheelers maker TVS Motor Company, for Rs 737 crore ($89 million) according to a company announcement.
The transaction involves a combination of primary capital infusion into TVS Capital and a secondary share purchase, TVS Credit Services said.
Of the total investment, TVS Credit has raised fresh equity capital of $58.2 million (Rs. 480 crore) from Premji Invest.
TVS Credit, which mostly offers loans for two-wheel vehicles and used cars, targets customers in Tier 3 and Tier 4 towns and attempts to make the loan process simple and hassle-free for customers with little or no credit background.
The primary capital will be utilised to strengthen TVS Credit’s efforts in expanding its customer base in new markets, increasing the channel partner network, and advancing its digitisation journey, TVS Credit said in a statement.
The company claims its assets under management (AUM) have surpassed Rs. 20,000 crore and expects it to grow to over Rs. 50,000 crore in the next few years. The company has a customer base of over 1 crore.
The company posted a threefold jump in net profit to Rs. 96 crore for the second quarter ended September.
“TVS Credit proposes to leverage technology and digital partnerships through an omnichannel approach to widen its customer base and significantly reduce the friction involved in traditional financing,” said TK Kurien, CEO and Managing Partner, of Premji Invest.
Other shareholders in TVS Credit include housing finance company HDFC Ltd, which has about 6.1% stake, and Phi Capital which holds around 4% stake in the company, according to VCCEdge, the data research platform of VCCircle. TVS Motor owns an 85% stake in TVS Credit.
According to Tracxn, Premji Invest has a portfolio of 57 companies, with 12 unicorns. Their latest investment was in Mintifi’s Series D Round in March. Some of its other portfolio companies include Lenskart, Policybazaar and ICICI Prudential Life Insurance.