The strategic investment comprises an initial investment of Rs 525 crore, with the potential for an additional Rs 275 crore through a subsequent tranche, subject to the achievement of specified business milestones, an official statement said.
From its inception in 2018, Arka Fincap has grown in scale and has built a stable and sustainable business. Over the past 18 months, the company has strengthened its leadership, built a pan-regional distribution network and incubated new secured lending businesses towards delivering value to all stakeholders.
The company has an asset under management (AUM) of Rs 8,000 crore and presence across ten states through 146 brances.
The investment from TPG will provide growth capital to support the evolution of the business through deepening its geographical reach and accelerating investments in technology and risk management capabilities, Arka said.
With TPG’s extensive sector experience and innovative approach towards building and scaling successful financial institutions, together with Kirloskar Group’s long-term institutional commitment, deep understanding of the geography and the customer, Arka is well positioned to capitalise on the vast opportunity in India’s secured lending market., it added.
“As a Group, we have always placed great value on enduring partnerships and the institution-building ethos of creating businesses that stand the test of time. We seek partners who share this philosophy, and we see a strong alignment with TPG’s approach. We believe this partnership marks the beginning of a meaningful, long-term relationship that will create lasting impact for Arka, TPG and all our stakeholders, most importantly our customers across the country,” Gauri Kirloskar, Vice Chairperson and Managing Director, Kirloskar Oil Engines Ltd, said.
“At Arka, we believe resilient financial institutions are built on capital anchored in character, customer servicing and unwavering tech-led credit discipline. Crossing Rs 1,000 crore in secured retail assets is a defining milestone in our ambition to build a formidable, future-ready financial enterprise, serving entrepreneurial aspirations of our country. Kirloskar Group’s established legacy and TPG’s global investment expertise create a trustworthy platform for Arka’s next phase of growth,” Samrat Gupta, Managing Director, Arka Fincap Ltd, said.
“Many of India’s MSMEs and vehicle operators remain underserved by formal financial services, and Arka has built a disciplined, secured retail lending platform to serve these customers, with the potential to reach even more customers at scale. We are excited to partner with the Kirloskar Group and Arka’s experienced team as the company enters its next phase of growth,” Simit Batra, BU Partner, TPG, said.
The investment reflects The Rise Funds’ approach to partnering with growth-stage, mission-driven companies with the potential to deliver meaningful impact at scale alongside strong performance. Arka’s growing presence in vehicle financing and secured lending to small businesses provides an opportunity to expand access to formal credit among entrepreneurs and vehicle operators, who are vital contributors to India’s economic ecosystem, the statement said.
Avendus Capital acted as the exclusive financial advisor and AZB & Partners acted as legal advisors to Arka on the transaction. Cyril Amarchand Mangaldas acted as legal advisors to TPG on the transaction.
