CATCHING THE NBFC WAVE

Just why NBFC is the latest holy grail in financial services.

- NEVIN JOHN

ADAR POONAWALLA never lets go of a good business opportunity. In the middle of Covid, in February 2021, when his Pune-based Serum Institute was ramping up vaccine production, Poonawalla, the scion of the vaccine empire, acquired a non-banking finance company (NBFC) to build the family's newest business-finance. His investment firm, Rising Sun Holdings Pvt. Ltd., took a majority stake in Magma Fincorp for ₹3,456 crore. This gave the Poonawalla family, which had launched an NBFC business in 2019, a boost as rural and semi-urban focused Magma was already operating in 21 states with five million customers and ₹15,006 crore loan book.

Another conglomerate that ventured into the NBFC business soon after Serum was the Godrej Group, which launched Godrej Capital under Godrej Industries in April 2022 with ₹2,000 crore initial capital. The family asked Adi's son Pirojsha to head the business. Its AUM has already crossed ₹7,800 crore. Pirojsha aims to take it to ₹50,000 crore by 2028.

Reliance chairman Mukesh Ambani also made a major move in financial services. He spun off the NBFC business from Reliance Industries and got it listed. "Jio Financial Services will be a technology-led business, delivering financial products digitally by leveraging the nationwide omnichannel presence of Reliance's consumer businesses," Ambani said during the launch.

There is no shortage of action in the financial services industry. Tata Group's Tata Capital is restructuring operations and expanding the board as part of a plan to go public by 2025. Hero FinCorp, the financial services arm of two-wheeler giant Hero MotoCorp, has shortlisted eight investment banks for an initial public offer (IPO) in 2024. The targeted size of the proposed IPO is around ₹4,000 crore. L&T Finance has stopped wholesale lending and metamorphosed itself into a retail financier.