Global private equity major Bain Capital has agreed to acquire 90 per cent of the equity capital of Adani Capital, the shadow banking arm of the diversified Adani group, which lends to small businesses and for low-cost homes, but couldn't make a mark since launch six years ago.
The transaction value which is undisclosed includes buying out 100 per cent of the Adani family's private investments in the company, with the incumbent chief executive Gaurav Gupta fully rolling his stake in the company and continuing to lead.
However, a source told PTI that the deal is for around Rs 1,600 crore of which around Rs 400 crore will immediately flow into the company.
Bain Capital has also committed USD 120 million in primary capital to facilitate the company's ongoing growth. Further, Bain is also immediately making available a USD 50 million liquidity line to the company in the form of non-convertible debentures, a statement from the PE major said late Sunday night.
Gupta and the team have built a business that supports entrepreneurialism and is trying to solve the USD 300 billion unmet retail MSME credit demand in the country, the statement said quoting its partner Rishi Mandawat.
He also noted that the company has the ability to serve and expand to core segments like agriculture, housing and to underbanked rural areas.
The statement also quoted Gautam Adani, the group chairman that he was happy that a credible investor like Bain is stepping in now and this will help the business grow manyfold from here.
"With Bain committing Rs 1,000 crore capital to the company, we are now equipped to grow 4x from here," Gaurav Gupta said.
Adani Capital has built an AUM of nearly Rs 4,000 crore and the deal values it around Rs 1,600 crore, a source told PTI. It has 170 branches across eight states, and over 2,500 employees.
Avendus Capital was the exclusive financial advisor to Adani Capital, while Rothschild advised to Bain on this transaction.
Bain Capital has deep experience in investing in domestic financial services businesses, including Axis Bank, 360One ( IIFL Wealth), Judo Bank, L&T Finance Holdings, Legacy Corporate Lending, and more.
The transaction is expected to close in Q4 of 2023, pending approvals.
The Adani group has been divesting stakes in key companies after the Hindenburg report in January roiled its plan to raise capital and triggered meltdown in stocks and thus the group valuation. This is the first exit from a business since the report came that alleged stock price manipulation and poor corporate governance which have been denied by the Adani group.