Private equity firm Carlyle and Indian billionaire Azim Premji’s investment unit are in separate talks to invest about $150 million in TVS Credit Services, an arm of scooter and motorcycle maker TVS Motors, two sources told Reuters.

The winner of the race to bet on India’s fast-growing shadow-banking sector could get a stake of 20%, one of the sources said. A valuation of about 50 billion rupees ($612 million) for TVS Credit is being discussed, both sources said.

The non-bank financial firms in India’s shadow-banking industry, as it is called, chiefly serve lower-income customers typically ignored by traditional lenders in the world’s most populous nation.

TVS Credit, which mainly offers loans for two-wheel vehicles and used cars, supporting its parent’s business, recently expanded into personal, consumer loans and pre-approved credit via credit cards for items such as mobile phones.

Carlyle engaged with the company a few months ago but Premji Invest is now the front-runner to strike a deal, said one of the sources, both of whom sought anonymity as the details of the talks were private.

A decision is expected by the end of May, the source added.

“There are two components to this business – the older, stable motor-financing arm and the new-age loans and services, which can be an add-on growth lever,” the second source said.

Carlyle and TVS declined to comment on the deal while Premji Invest did not reply to queries seeking comment.

TVS Credit’s total income grew 14% to 10.9 billion rupees for the quarter ended Dec. 31, while net profit stayed nearly flat at 979 million, unaudited financial statements on its website show.

Private equity funds bet $2.2 billion on India’s non-bank financial services companies last year, up 57% from 2021, a report from Bain and Co showed. Last year, Warburg Pincus invested in Indian non-bank lender Vistaar.

($1=81.7650 Indian rupees)

Reuters