Kirloskar-Backed Arka Fincap Secures ₹525 Crore Investment From TPG

Kirloskar Oil Engines Limited (KOEL) has announced that its subsidiary, Arka Fincap Limited, has entered into definitive agreements with global alternative asset management firm TPG for an investment of ₹525 crore, with the potential for an additional ₹275 crore in a second tranche.

The investment will be made through TPG's The Rise Funds, its impact investing platform. The initial investment of ₹525 crore is subject to the completion of specified conditions, while the additional ₹275 crore will depend on Arka achieving agreed business milestones and securing the necessary regulatory approvals.

The transaction involves the subscription of equity shares and compulsorily convertible preference shares (CCPS) in Arka Fincap. The agreement was signed on November 6, 2026, between Arka Fincap, TPG SG Arca Pte. Ltd., Kirloskar Oil Engines and its wholly owned subsidiary Arka Financial Holdings Private Limited.

TPG Investment to Reduce Kirloskar's Stake in Arka Fincap

Following completion of the first investment tranche, Kirloskar Oil Engines, through Arka Financial Holdings, will hold 68.587% of Arka Fincap's equity shareholding on a fully diluted basis, compared with its current holding of 90.279%.

After the second tranche is completed, KOEL's indirect stake in Arka Fincap is expected to reduce further to 62.607%.

The first tranche involves the subscription of 100 equity shares and 32.53 crore CCPS for an aggregate consideration of ₹525 crore. The proposed second tranche involves the subscription of 12.93 crore CCPS for ₹275 crore.

The shareholders' agreement provides TPG with the right to appoint one nominee director to Arka Fincap's board, alongside customary minority protection rights, reserved matters, share transfer restrictions and exit provisions.

KOEL has clarified that the transaction will not affect its own management or control. TPG will not receive any rights relating to the board, management or shares of Kirloskar Oil Engines.

Arka Fincap Reports ₹8,000 Crore Assets Under Management

Arka Fincap, which commenced operations in 2018, has built an assets under management (AUM) base of approximately ₹8,000 crore. Its secured retail lending portfolio exceeds ₹1,000 crore, supported by a network of 146 branches across ten states and a workforce of more than 2,000 employees.

The NBFC offers financing solutions across pre-owned vehicle financing, secured business loans, loans against property and wholesale lending. Its customer base includes entrepreneurs, micro, small and medium enterprises (MSMEs), vehicle operators and corporate clients.

The proposed investment will provide capital for geographical expansion and investments in technology and risk management capabilities. Arka also plans to expand its secured retail lending operations while continuing to operate its wholesale lending platform.

As part of the shareholders' agreement, the Kirloskar Group has agreed that its NBFC lending activities will be conducted exclusively through Arka Fincap, subject to specified carve-outs. The agreement also restricts KOEL and its affiliates from establishing or investing in other NBFC lending businesses.

Arka Fincap is rated CRISIL AA/Stable.