Forays into retail biz with majority stake buy in Chennai-based VKC Credit and Forex
Essel Finance, the financial services arm of Mumbai-based Essel Group, which has inked a deal to pick up 63% stake in Chennai-based VKC Credit and Forex, a money changing services company, is targeting $1 billion sales in 2-3 years.
The new entity, which will be re-christened Essel Finance VKC Forex, will enhance its business from the current portfolio consisting of currency notes, traveller cheque and pre-paid cards.
"As per the deal, we are buying out 28.3% held by Dr Jayam, sister of one of the promoters N Nageswaran. After buying out some more shares held by the current promoters and undertaking a rights issue, Essel Finance will eventually hold 63% in the company. The two promoters – R Venkata Subramaniam and N Nageswaran – will continue to hold the remaining one-third stake, and will run the company," Amitabh Chaturvedi, managing director, Essel Finance, told dna.
"The deal is done. We have informed the Reserve Bank of India. Now, we are awaiting the RBI nod for the share transfer," said Chaturvedi. He, however, refused to give the size of the deal.
VKC Credit and Forex is one of India's leading foreign exchange players. It has 52 offices and 19 franchisees, making it 71 touch points, and over 900 corporate clients. The company holds an RBI licence as an authorised dealer in Category II.
"We are among the top three players, among the five active dealers in the Category II. Last fiscal, we managed Rs 1,600 crore worth of annual sales in currency notes, and $200 million of traveller cheques and pre-paid cards.
This financial year, we will manage up to $450 million in combined sales," said Nageswaran.
According to him, another potential area for growth is outward remittances. "Last year, we managed $70 million from outward remittances. This year, we should come close to $130-140 million," said Nageswaran.
Essel Finance, which recently floated a real estate fund and forayed into SME lending, says the takeover would essentially mean the group's retail foray. "We will bring in capital, brand and financial strength," said Chaturvedi.
Essel Finance also plans to get into financial products distribution business to distribute mutual funds, micro-finance and housing finance products, among others. It will develop synergies with VKC's large network and geographical presence to distribute other financial products and services such as insurance and mutual funds across the country.
The company has already got into private equity, investment banking and non-banking finance company (NBFC) business.
Expanding footprint
VKC Credit and Forex is one of India's leading foreign exchange players
It has 52 offices and 19 franchisees, making it 71 touch points, and over 900 corporate clients
The company holds an RBI licence as an authorised dealer in Category II
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