TIAA, Accion, Motilal Boost Stakes in IKF Finance as Funding Round Expands to ₹800 Crore

Existing Backers Reinforce Commitment; Norwest Joins as New Investor

Hyderabad-based NBFC IKF Finance has upsized its latest funding round to ₹800 crore ($96 million), attracting both fresh capital from new investor Norwest Venture Partners and increased contributions from existing marquee institutional investors. The earlier funding target of $70–80 million was revised upwards after enhanced interest from stakeholders including TIAA, Accion Digital Transformation Fund, Motilal Oswal Wealth, and the India Business Excellence Fund IV managed by Motilal Oswal Private Equity. Founder and promoter VGK Prasad also participated in the round. Sources confirmed that the upsizing reflects robust investor confidence in IKF’s business model, especially its focus on the underpenetrated MSME lending segment.

Highlights:

• Total round raised to ₹800 crore ($96 million), up from earlier target of $70–80 million.

• Norwest enters as a new investor; existing investors increase stakes.

• Participation from TIAA, Accion, Motilal Oswal PE, and founder VGK Prasad.

Institutional Shareholding Set to Rise to Over 20% Post-Fundraise

Following the equity infusion, existing institutional investors are expected to collectively hold around 20–21% of IKF Finance, although individual holdings remain undisclosed. Prior to this round, Motilal Oswal and Accion jointly held 29.72%, while TIAA owned 7.96% and promoters controlled 42.84%. This capital raise positions IKF among the largest primary equity fundraises by any Indian NBFC in recent months and reflects growing foreign and domestic appetite for non-banking lenders focused on the MSME and used vehicle segments. Over the past year, several global investors such as Avataar Ventures, Sofina, Madison, Ontario Teachers’ Venture Growth, Prosus, and TIAA have infused capital into similar players including Finova Capital, Mintifi, and Flexiloan.

Highlights:

• Institutional investors to jointly own over 20% post-deal.

• Promoters retain 42.84% stake.

• One of the largest NBFC equity raises in recent quarters.

Historical Funding Momentum Reflects Long-Term Strategic Backing

This round is among IKF Finance’s most significant equity infusions, following a ₹120 crore raise from TIAA in 2024 and ₹255 crore from Accion and high-net-worth individuals (HNIs) in prior years. The long-term support from key institutional players highlights a steady confidence in the NBFC’s growth trajectory and operational strength. Founded over 30 years ago as IndraKeela Financiers Pvt Ltd by VGK Prasad, the company has transitioned into a leading regional NBFC. The leadership has remained within the family, with K Vasumathi Devi, the founder’s elder daughter, assuming the role of Managing Director in 2022, and Vasantha, the younger daughter, leading IKF Home Finance, the housing finance arm.

Highlights:

• Past funding includes ₹120 crore from TIAA and ₹255 crore from Accion/HNIs.

• Founder VGK Prasad remains key promoter.

• Company leadership includes both daughters in senior executive roles.

Regional Expansion Drives AUM Growth Amid Market Diversification

IKF Finance, which had delisted from BSE and ASE in 2015, maintains a strong regional base in Andhra Pradesh and Telangana, which contribute nearly 70% of its assets under management (AUM). The company has also been expanding steadily into Odisha, Gujarat, Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh, and Rajasthan. According to Care Ratings, its branch network expanded from 134 to 179 branches between FY24 and September 2024, a testament to its geographic diversification strategy.

Highlights:

• 70% of AUM still concentrated in AP and Telangana.

• Expansion underway in 7 additional Indian states.

• Branch count rose from 134 to 179 in under 18 months.

Used Vehicle Loans and SME Lending Form Bulk of Loan Portfolio

IKF Finance’s business is primarily divided into two segments. Its core area remains used vehicle financing, which accounts for approximately 78% of the NBFC’s AUM. This includes loans for commercial vehicles, construction equipment, and three- and four-wheelers. The second major vertical involves high-ticket SME lending, including loans to other NBFCs. Additionally, the company operates a housing finance subsidiary, IKF Home Finance, focusing on home loans and loans against property (LAP).

Highlights:

• Used vehicle loans form 78% of AUM.

• High-ticket SME lending is the secondary segment.

• IKF Home Finance handles housing-related credit products.

Financial Performance: Robust Growth in Disbursals and Profitability

In FY24, IKF Finance recorded loan disbursals of ₹3,145 crore, representing a 53% year-on-year increase. The company also posted profit after tax (PAT) of ₹100 crore on a total income of ₹586 crore, reflecting 64% and 55% annual growth, respectively. Its AUM has grown at a CAGR of 39% over the last three years, rising from ₹1,777 crore in March 2021 to ₹4,811 crore in March 2024, and further to ₹5,386 crore by September 2024 — a 53% year-on-year increase. The company’s asset quality remains stable with a gross NPA of 2.25% and net NPA of 1.75% as of September 2024.

Highlights:

• FY24 loan disbursals up 53% to ₹3,145 crore.

• PAT grew 64% to ₹100 crore on ₹586 crore income.

• AUM surged from ₹1,777 crore to ₹5,386 crore in 3 years.

• Gross NPA at 2.25%, net NPA at 1.75% (as of Sep 2024).