Ambit Finvest was in the news recently for its acquisition of SMECorner, a fintech lender. Sanjay Agarwal, CEO and Vikrant Narang, Deputy CEO, Ambit Finvest outline what’s in store for the company. Edited excerpts:
From shielded rumors of your NBFC business collapsing to acquiring a fintech lender, business seems to have been going well…
Agarwal: The acquisition of FinMax, which I previously supported, changed Ambit Finvest’s DNA. Ambit Finvest was set up mainly for structured finance. Later we shifted to value based companies and now we serve mass markets. And then we raise the capital, which made Adar Poonawalla take a 20 percent stake in the company. Now we’re supporting the business with the technology and we acquired SMECorner because it would help distribute the types of credit we offer.
How would your book change if you bought it?
Agarwal: Current book size is around ₹1,800 crore; The book may not increase due to the acquisition as we are receiving about 200 crore of book. But in one fell swoop we get around 300 employees, a technology that has been developed over four years, many B2B partnerships and, above all, entry into the FinTech sector. The books will be merged by March. We will continue to pursue technology development very aggressively and acquire businesses involving technology.
What products are you focusing on?
Agarwal: One of them is mortgages backed by collateral, which is our core business. Then we have the unsecured business, which is business installment loans, which are typically given to more organized SMEs, and we have a used commercial vehicle financing segment, which is about 10 percent of our total portfolio. The mortgage business requires a large branch network.
Narang: Mortgages basically finance MSMEs or very small businesses and we only take three types of collateral – owner-occupied commercial real estate or residential real estate or industrial real estate. The portfolio at this point would have a loan-to-value of less than 50 percent and an average ticket size of around 14 to 15 lakh per LAP product.
What would your customer base look like?
Agarwal: Mortgages are generally for people who are relative now; may have been in business for 1-3 years and want to grow their business. In the unsecured business, we assume proven track records. We only lend to clients who have a good credit history but are relatively new to banking. Unsecured storage space is a bit risky, but very rewarding and a scalable business. You can shift this business to technology, and so we mainly target customers in metropolitan and urban markets. The smaller mortgage business is targeted in the Tier 2/3 markets. For the vehicle business, we finance drivers – those who want to own a used vehicle.
How geographically spread is the business?
Agarwal: We covered DMIC (Delhi-Mumbai Industrial Corridor) first and now Bombay to Bangalore. The entire ecosystem is being developed around these states. We carefully select that our offices should be within 200 kilometers of the Autobahn. All SMEs will benefit from this ecosystem and our logistics business will fit into this whole.
Would you open up the capital market?
Narang: If you’re an £8,000 to £10,000 company then you might be ready for the capital markets. But as a natural consequence of this event, we would need a private round of capital. We should close our book at £2,000-2,300m by March 2023. In the next 2 to 3 years we want to get closer to £8,000 to 10,000 million because we have grown at 70 to 75 percent CAGR over 3 to 4 years. Our debt: Equity today is only approaching about 2x. We have enough fuel in the tank to grow.
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Released on January 29, 2023
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