IndoStar Finance Capital sells corporate loan book to Phoenix ARC

IndoStar Finance Capital Limited (ICFL), a non-banking finance company (NBFC) registered with the Reserve Bank of India, has sold a considerable chunk of its legacy corporate loan book to Phoenix ARC. This strategic move falls in line with IndoStar’s focus on its retailization strategy, comprising mainly of loan accounts tagged in Stage 2 with dues outstanding aggregating to Rs 915 crores. The sale was finalized on August 25, 2023, via an ARC sale under the Swiss Challenge method in line with Reserve Bank of India‘s Master Directions on Transfer of Loan Exposures as amended in 2021.

Phoenix ARC to Set Up Trust for Real-Estate Project Monitoring

Strategic Agreement Allows IndoStar to Focus More on Core Retail Lending

As part of the deal, Phoenix ARC will establish a trust that will oversee the progress of real estate projects involved. The trust will also explore opportunities to finance the completion of these projects. This agreement enables IndoStar to realign its operational focus significantly towards strengthening its core retail lending business.

Retail Lending Now Makes Up 95% of IndoStar’s AUM

IndoStar’s Retail Lending Soars After Latest Corporate Loan Book Sale

With the completion of this sale, IndoStar has seen the share of its retail lending book rise from 85% to an impressive 95% in its assets under management (AUM). In line with the company’s recent focus on used vehicle financing, the CV disbursal yields have climbed to over 18%, thereby incrementally increasing the yield of the overall portfolio. This focus also resulted in lower average ticket sizes for loans, standing at Rs 7.6 lakhs for Q1 FY’24.

IndoStar Reports Strong Financials for Q1 2023

High Debt-to-Equity and Capital Adequacy Ratios Position IndoStar for Growth

IndoStar’s financial health appears robust, with a Debt-to-Equity ratio of 1.9x and a strong capital adequacy ratio (CAR) of 34.4% on a standalone basis for the quarter ending June 2023. These metrics, along with sufficient liquidity, firmly position IndoStar Finance Capital Limited for continued expansion and growth in its focused retail lending sector.