News ArticleKirloskar Oil Engines-backed Arka Fincap Raises INR 525 Crore Investment from TPG to Boost Secured Retail Lending
TPG’s The Rise Funds to potentially invest additional INR 275 crore upon milestone achievement, supporting Arka’s growth and retail transformation
Kirloskar Oil Engines Limited announces strategic investment by TPG in its subsidiary Arka Fincap Limited, with an initial INR 525 crore infusion and potential INR 275 crore follow-up, aimed at expanding Arka's secured retail lending business across India.
Kirloskar Oil Engines Limited
Preferential Issue
Kirloskar Oil Engines Limited’s subsidiary, Arka Fincap Limited, secured INR 525 crore in an initial tranche from TPG’s The Rise Funds, with a potential follow-up investment of INR 275 crore contingent on business milestones and regulatory approvals, to accelerate its growth in secured retail lending.
The Board of Kirloskar Oil Engines Limited approved and executed a Shareholders’ Agreement with Arka Fincap Limited (AFL), Arka Financial Holdings Private Limited (wholly owned subsidiary of KOEL), and TPG SG Arca Pte. Ltd., marking TPG’s proposed investment in AFL.
KOEL holds 100% of Arka Financial Holdings Private Limited, which in turn holds 90.279% equity in Arka Fincap on a fully diluted basis prior to investment. Post the first tranche investment by TPG, KOEL’s holdings through AFHPL will reduce to 68.587%, and after the second tranche, to 62.607%.
The investment is structured through subscription to equity shares and compulsorily convertible preference shares issued in two tranches: an initial tranche of 100 equity shares and over 32.53 crore preference shares totaling INR 525 crore; and a second tranche of approximately 12.93 crore preference shares for INR 275 crore, subject to business milestones and regulatory approvals.
The Shareholders’ Agreement includes provisions relating to governance rights, including TPG’s right to appoint one nominee director on AFL’s board, minority protections, transfer restrictions, and exit rights, but does not impact KOEL’s management or control.
Arka Fincap has built an assets under management (AUM) of approximately INR 8,000 crore with a secured retail portfolio exceeding INR 1,000 crore, operating from 146 branches across ten states with over 2,000 employees. The company holds a CRISIL AA/Stable rating backed by Kirloskar Group’s institutional strength.
Highlights
- TPG’s initial investment of INR 525 crore in Arka Fincap executed on 6th November 2026.
- Potential additional investment of INR 275 crore subject to business milestones and regulatory approval.
- KOEL’s holding in Arka Fincap to reduce from 90.279% to 62.607% post full subscription.
- Arka Fincap has an AUM of ~INR 8,000 crore with secured retail loans exceeding INR 1,000 crore.
- Shareholders’ Agreement grants TPG right to appoint nominee director and minority protection rights.
- No change to KOEL management or control as a result of the agreement.
Key Data Snapshot
What happened
- Kirloskar Oil Engines Limited’s Board approved and executed a Shareholders’ Agreement with TPG and its subsidiaries relating to TPG’s investment in Arka Fincap Limited on 6th November 2026.
- TPG invested an initial INR 525 crore in Arka Fincap by subscribing to equity and preferential shares, with a second tranche of INR 275 crore contingent on milestones and regulatory approvals.
- KOEL through its subsidiary AFHPL holds majority shares in Arka Fincap before and after the investment, but its control remains unaffected.
Key details
- The Shareholders’ Agreement includes governance rights such as TPG’s right to appoint a nominee director on Arka Fincap’s board and minority protections including reserved matters.
- KOEL holds 68.587% of Arka Fincap’s equity on a fully diluted basis after the first tranche, reducing to 62.607% after the second tranche.
- KOEL and its affiliates agreed to conduct NBFC lending exclusively through Arka Fincap subject to certain exceptions.
- The transaction is not a related party transaction and is done at arm's length.
Transaction details
- The first tranche involves subscription of 100 equity shares and 32,53,45,231 compulsorily convertible preference shares aggregating INR 525 crore.
- The second tranche involves subscription of 12,93,34,496 compulsorily convertible preference shares aggregating INR 275 crore, subject to business milestones and regulatory approvals.
- The effective date of the Shareholders’ Agreement is upon completion of the first tranche subscription.
- There are customary transfer restrictions, exit rights, and minority protections included in the agreement.
Strategic context
- Arka Fincap is a Kirloskar Group-promoted NBFC with a growing secured retail lending portfolio and an AUM of approximately INR 8,000 crore.
- This investment from TPG’s The Rise Funds is intended to accelerate Arka’s growth and retail transformation plans.
- Arka operates 146 branches in ten states with over 2,000 employees and holds a CRISIL AA/Stable rating.
Highlights
- TPG’s initial investment of INR 525 crore in Arka Fincap executed on 6th November 2026.
- Potential additional investment of INR 275 crore subject to business milestones and regulatory approval.
- KOEL’s holding in Arka Fincap to reduce from 90.279% to 62.607% post full subscription.
- Arka Fincap has an AUM of ~INR 8,000 crore with secured retail loans exceeding INR 1,000 crore.
- Shareholders’ Agreement grants TPG right to appoint nominee director and minority protection rights.
- No change to KOEL management or control as a result of the agreement.
Disclosures
- SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
- SEBI Circular no. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated 30th January 2026
KOEL is promoter and holds majority shares in Arka Fincap through its subsidiary AFHPL.
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