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Mumbai: US-based stressed assets fund Lone Star and former promoter of Indiabulls, Rajiv Rattan, have formed an equally-owned joint venture finance company to make it one of India’s top five wholesale and retail financiers.

The partners have invested $200 million (Rs 1,300 crore) each in the company, RattanIndia Finance, and committed to further fund its expansion. RattanIndia Finance started operations in the last fiscal year.

It is currently in the process of setting up a housing finance company as well. “So far, we have jointly invested $400 million and we will invest a further $200 million as and when required to support growth of wholesale and retail loan book.

We shall raise further equity from institutional investors, if required in future,” RattanIndia chairman Rajiv Rattan said.

“With $400 million capital, we are already among the top 10 finance companies in the country and $400 million is the single largest initial equity commitment made by a finance company,” he said.

The company has roped in talents from large financial companies.

Ravi Agarwal, who was previously with Edelweiss Group, has joined as head of wholesale lending.

Former Capital First executive Amit Mande is head of retail lending, while Manish Chitnis, who previously worked at Fullerton, is leading treasury operations.

Lone Star, a $70 billion private equity fund, has applied for a licence to set up an asset restructuring company in India. “We look forward to contributing to credit availability and credit penetration in India, and we welcome Lone Star’s confidence in us given its success in identifying value and opportunity in markets around the world.

The capital strength of RattanIndia Finance will immediately make it a key lending platform for corporates and retail (customers)," said Rattan. Over the next 4-5 years, the company’s loan book will be equally divided between corporate and retail borrowers, he said.“There is adequate room for a new player like us to come in and play a meaningful role, since the corporate credit market size is quite large,” said Ravi Agarwal, head of wholesale banking. “Also, given that PSU banks and select private banks aren’t able to lend for the last two-three years due to high level of NPAs, and are unlikely to play an active role in next 3-4 years, there is good opportunity for finance companies to fill in the gap to meet corporate credit requirement, which is expected to grow in the next five years driven by economic recovery.”





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