TPG's Rise Funds invests in Kirloskar Oil Engines unit Arka Fincap

Kirloskar Oil Engines Limited (KOEL) said its subsidiary Arka Fincap Limited has signed definitive agreements for a strategic investment from TPG's The Rise Funds. The initial amount is INR 525 crore, with a further INR 275 crore possible in a later tranche tied to business milestones and regulatory approvals. The deal is not yet closed.

Arka Fincap focuses on secured retail lending and has been operating since 2018. As of the announcement it had assets under management of about INR 8,000 crore, a secured retail portfolio above INR 1,000 crore, and is rated CRISIL AA/Stable. KOEL, through Arka Financial Holdings Private Limited, holds 90.279% of Arka on a fully diluted basis.

KOEL said the investment will fund geographic expansion and investment in technology and risk management, and that its stake through the holding company will fall to 68.587% after the first tranche and 62.607% after the second. A shareholders' agreement among KOEL, Arka, the holding company and TPG SG Arca Pte. Ltd. has been executed.