A binding agreement has been reached by top global private equity company Bain Capital to buy 90% of Adani Capital and Adani Housing. The deal will completely wipe away the Adani family’s private investments in the business, with Gaurav Gupta maintaining his position as the company’s managing director and chief executive officer.
On May 26, 2023, Adani Capital had instructed Avendus, was in the stake sale process, and had started talking to potential private equity buyers in order to earn around Rs 1,500 crore through a primary and secondary issuance of shares.
In order to support the business’s ongoing growth, Bain Capital has additionally provided $120 million in primary capital. Additionally, Bain Capital will make a $50 million line of credit in the form of non-convertible debentures immediately accessible to the company.
“Gaurav and the team have established a large-scale lending company that encourages entrepreneurship and works to meet the nation’s unmet need for retail MSME credit, which is estimated to be worth $300 billion+. Rishi Mandawat, a Partner at Bain Capital, stated that the company has excellent business foundations, an experienced staff, and the capacity to service and expand to core categories including agriculture, housing, and to underbanked rural areas. “We see compelling opportunities to partner with Gaurav and the team to support and facilitate Adani Capital’s next phase of growth by providing access to substantial capital, strategic and operational resources, and deep experience partnering with financial services businesses in India and around the world,” the statement continued.
The chairman of the Adani Group, Gautam Adani, remarked, “I have known Gaurav from his days as an investment banker. He wanted to start his own business, and I supported him. He has made a significant contribution to the Adani Group in addition to developing a solid financial services company with a focus on the underserved in semi-urban and rural India. I am thrilled that a reputable investor like Bain is moving in at this time since it will help the business multiply going forward.
“It has been an extraordinary six years,” said Gaurav Gupta. “To have the money, a strong brand, and, more importantly, the freedom to build a business is perhaps unprecedented. I thank Gautam Bhai for the opportunity and for his faith in me.” “Our goal has always been to empower micro-entrepreneurs and first-time homebuyers in Bharat and to use technology to make us the most affordable and practical lender for our clients. The team and I are thrilled to have a partner like Bain Capital on board who shares our objective of providing our customer segment with accessible finance while placing a strong emphasis on customer literacy and education. With Bain investing Rs 1,000 crore in the business, we are now prepared to expand.
According to the Ministry of Micro, Small & Medium Enterprises, entrepreneurship and rising consumption rates are causing a sharp rise in the number of MSMEs, which now make up a significant portion of the Indian economy and account for about 30% of its GDP. Only 10% of MSMEs in India, despite their potential, have access to a formal source of capital to support their growth objectives, which are more pressing in rural areas. In order to democratize access to inexpensive, simple lending options and promote India’s upcoming MSMEs and entrepreneurs, Adani Capital was established in 2017. Adani Capital has amassed an AUM of around $500 million, a network of more than 170 offices across eight states, and a team to realize that objective.
Adani Capital, Adani Housing Finance, and its stockholders had only one financial advisor for this deal, Avendus Capital. In this transaction, Bain Capital received financial advice just from Rothschild.
A diverse group of financial services companies, including as Axis Bank, 360One (formerly IIFL Wealth), Judo Bank, L&T Finance Holdings, Legacy Corporate Lending, and others, are supported by Bain Capital’s extensive investment expertise.
The deal is anticipated to completion in Q4 2023, subject to all market and regulatory clearances.
