TPG has agreed to invest in Arka Fincap, a lender promoted by the Kirloskar Group, through its impact investing platform, The Rise Funds. The two sides signed definitive agreements for an initial investment of $56 million at current exchange rates, according to Mint.
The investment could grow by another $29 million if Arka meets set business milestones and wins regulatory approvals. Arka will use the money as growth capital: to reach more regions, and to invest in technology and risk management.
Arka offers pre-owned vehicle financing, secured business loans, loan against property and wholesale lending. Its customers include entrepreneurs, small businesses, vehicle operators and corporate clients. The report said the lender has assets under management of $850 million and 146 branches across ten states. The company has operated since 2018.
Simit Batra of TPG said the opportunity lies with customers that formal lenders underserve. “Many of India’s MSMEs and vehicle operators remain underserved by formal financial services, and Arka has built a disciplined, secured retail lending platform to serve these customers, with the potential to reach even more customers at scale,” he said.
Samrat Gupta, Arka’s managing director, said the lender has passed $106 million in secured retail assets, which he called “a defining milestone.” Avendus Capital was the exclusive financial advisor to Arka.
Gauri Kirloskar, vice chairperson and managing director of Kirloskar Oil Engines, said the group values lasting partnerships. “As a group, we have always placed great value on enduring partnerships and the institution-building ethos of creating businesses that stand the test of time,” she said. Kirloskar Oil Engines is one of the flagship companies of the Kirloskar Group, which has been in business for eight decades. It makes engines, generator sets, industrial engines, agricultural equipment and water management solutions.
According to the report, TPG’s impact platform manages $37 billion in assets across a family of funds. The Rise Funds focus on climate and decarbonization, education, financial inclusion, healthcare and impact technology.
The deal puts a global investor behind a lender in a part of India’s market where, in Batra’s words, formal finance still falls short. It also shows how a family-led industrial group brings in an outside investor to fund the next stage of a lending business.
