TruCap Finance Limited has announced the sale of its entire gold loan business to InCred Financial Services Limited for a total consideration of approximately ₹330 crores. The transaction, structured as a slump sale, involves the transfer of assets, liabilities, and associated trademarks such as “Dhanvarsha.” This move is aimed at strengthening TruCap’s balance sheet by reducing debt and refocusing on its green energy finance and MSME lending business. The deal is expected to be completed by April 30, 2025, subject to necessary approvals.

Key Details of the Deal

A) Seller: TruCap Finance Limited

• A non-banking financial company (NBFC) with a focus on small business loans and gold loans.

• Decided to exit the gold loan business to reallocate capital towards high-growth segments.

B) Buyer: InCred Financial Services Limited

• A well-diversified NBFC engaged in personal loans, MSME loans, and education finance.

• Reported a turnover of ₹1,292.32 crores and a net worth of ₹3,320.40 crores as of March 31, 2024.

C) Nature of the Transaction

• Slump Sale: The gold loan business is being sold as a going concern, meaning all related assets, liabilities, and branding will be transferred without cherry-picking specific assets.

• This includes the transfer of the "Dhanvarsha" brand and other associated intellectual property.

D) Financial Considerations

• The sale is valued at ₹330 crores, but the final consideration will depend on the principal outstanding at the time of closing.

• The gold loan business contributed ₹66.40 crores to TruCap’s revenue in FY 2023-24, representing 36.48% of its total revenue of ₹182.01 crores.

• The net worth of the gold loan division stood at ₹106.29 crores, which was 48.47% of TruCap’s total net worth.

• Assets under management (AUM) for TruCap were ₹597.82 crores, of which the gold loan business accounted for ₹289.82 crores.

E) Strategic Rationale for the Sale

TruCap Finance has outlined the following reasons for exiting the gold loan business:

1. Debt Reduction: The proceeds from the sale will be used to lower leverage, improving financial stability.

2. Strengthening Net Worth: Selling a capital-intensive business like gold loans allows the company to free up capital for expansion in more strategic sectors.

3. Focus on Green Energy & MSME Finance: The company aims to scale up its green energy finance and MSME business loans, which are considered high-growth areas.

F) Timeline & Regulatory Approvals

• A binding term sheet was signed on February 25, 2025.

• The deal is expected to close by April 30, 2025, subject to:

  • Shareholder approvals

  • Regulatory clearances

• No impact on TruCap’s shareholding pattern is expected.

G) InCred’s Expansion Strategy

For InCred Financial Services, acquiring TruCap’s gold loan business is a strategic expansion move. Gold loans offer secured lending opportunities with lower default risks, making them an attractive addition to InCred’s existing portfolio.

What is a Slump Sale?

A slump sale is a form of business transaction where a company sells an entire business unit, division, or undertaking as a "going concern", meaning all assets and liabilities are transferred without itemized pricing for individual components.

Key Features of a Slump Sale:

1. Entire Business Transfer: The sale must include an entire undertaking, meaning it cannot selectively exclude specific assets or liabilities.

2. Going Concern Basis: The business continues to operate after the transfer, ensuring minimal disruption.

3. Lump-Sum Consideration: The buyer pays a single price, rather than valuing individual assets separately.

4. Taxation Impact:

   • The seller may be liable for capital gains tax.

   • If the business has been held for more than 36 months, long-term capital gains tax (LTCG) may apply.

Why Companies Opt for Slump Sales?

• Streamlining Business Focus: Selling non-core businesses allows companies to reallocate capital to more strategic areas.

• Quick & Efficient Transactions: Unlike asset-by-asset sales, a slump sale ensures simpler valuation and faster regulatory approvals.

• Improved Financial Ratios: Reducing debt and focusing on high-margin businesses enhances return on equity (ROE) and profitability.

Conclusion

The TruCap-InCred deal marks a significant shift in India’s NBFC landscape, highlighting the growing importance of specialization in financial services. While TruCap Finance exits gold loans to strengthen its position in MSME and green energy financing, InCred gains a strategic foothold in the gold loan segment, expanding its secured lending portfolio.

As the transaction moves towards completion, the NBFC sector will be keenly watching how this deal impacts market dynamics, lending trends, and financial performance for both entities.