Private equity firm KKR is all set to buy stake in fintech startup firm Incred Finance, according to an industry source.
KKR and InCred have signed an exclusivity agreement under, which the private equity firm plans to merge its retail NBFC arm with Incred.
"We understand that the equity injection will take the form of a merger of KKR's wholesale NBFC with InCred's Retail franchise. The aim appears to create a strong tech-focused Indian financial services behemoth," the source privy to the development said.
KKR and its limited partners will pick up a large minority interest in InCred, the source added.
The combined entity will operate under the InCred brand name, and post the deal, the merged book size will be around Rs 6,000 crore with a relatively low debt-equity ratio.
The four-year-old startup, founded by former Deutsche banker Bhupinder Singh, has raised over Rs 1,000 crore till date from a set of investors, including Investcorp, Manipal chief Ranjan Pai, Dutch government-owned FMO, Moore Venture Partners, Paragon, Elevar and OAKS Asset Management amongst others.
"KKR India Financial Services Ltd also has two other marquee investors - Abu Dhabi Investment Authority (ADIA) and Texas Teacher Retirement System. Both these investors will also join the InCred equity roster," the source said.
KKR recently invested around $1.5 billion into Reliance Jio Platforms and announced a majority acquisition of JB Chemicals for as much as $500 million. It has a controlling interest in other Indian companies like IndiGrid Trust, EuroKids, Max Hospitals, Avendus Capital and Ramky Enviro Engineers.
"With its investment in InCred, KKR is doubling down on its bet in Indian Financial Services, attracted by the vast potential offered by the country's underserved consumers and small businesses," the source noted.
Both KKR and Incred declined to comment on the matter.