TVS Finance to raise $37.5-$62.5 Mn from strategic investor
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Chennai: TVS Finance & Services, finance arm of TVS Group based in Chennai, will rope in a large Indian non-banking finance company as a strategic investor by June 1. Gopal Srinivasan, Chairman of TVS Finance, said that the company is planning to raise about $37.5 million to $62.5 million from the strategic partner, which will be a large Indian NBFC who does not have a presence in consumer finance. He said the deal is expected to be completed by June. Indicating probability of a strategic sale, TVS Finance board on February 9 decided to delist from the bourses, which would take 90 days to complete. Srinivasan said that the group would not exit the business completely; it's looking at a strategic investment instead. "We are running low on capital adequacy. We have a large amount of marginally performing assets. So we have decided to bring in fresh capital," said Srinivasan, adding that the new trend is to have a captive joint venture within an auto firm rather than sustaining an independent finance company on its own. Srinivasan said they are in talks with a large number of potential partners, although refused to divulge any names. Some of the likely Indian names could be Cholamandalam DBS, SREI Finance and Magma Leasing. The company has appointed Mumbai investment bank Edelweiss Capital as an advisor for the deal. Srinivasan said that private equity funding is an option. But it has to be a buyout fund which also comes with substantial managerial contribution. So they are not looking for plain capital. The company has an equity of Rs 42 crore. It may cost another Rs 10 crore for the company to buy back shares from the public market. However, the company's shares have been hitting 5 percent upper circuit in the last few days, and it's currently trading at Rs 22.60. Srinivasan said that the company will undergo a massive financial restructuring before it brings in the strategic partner.

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