Bain Capital is planning to buy out the Adani family’s private assets in Adani Capital and Adani Housing. Bain Capital will also contribute $120 million in primary capital to the company’s expansion. The sale will contribute to the reduction of liabilities on the Adani group’s balance sheet.
According to the official release, Bain Capital has also provided $120 million in primary capital to help the company’s ongoing expansion.
On Sunday, the private equity company Bain Capital announced that it had bought 90% of Adani Capital and Adani Housing, the Adani Group’s two non-banking financial entities, for an undisclosed sum. The remaining ownership in the two companies will be held by Gaurav Gupta, the current CEO and managing director, according to the announcement.
Bain Capital has also given $120 million in primary capital to help the NBFC continue to develop. Furthermore, Bain Capital will provide the Company with a $50 million liquidity line in the form of non-convertible debentures.
“The transaction will buy out 100% of the Adani family’s private investments in the company, with Gaurav Gupta fully rolling his stake and continuing to serve as Managing Director and CEO,” according to the press statement.
“The company has strong business fundamentals, an experienced team, and the ability to serve and expand to core segments like agriculture, housing, and underbanked rural areas,” said Bain Capital Partner Rishi Mandawat.
The NBFC, which focuses on lending to MSMS, agriculture, and affordable housing, is attempting to address the country’s $300 billion+ unmet retail MSME credit demand.
“I have known Gaurav since his days as an investment banker,” Adani Group Chairman Gautam Adani remarked. “He wanted to be an entrepreneur, and I supported him.” He has not only created a solid financial services firm in semi-urban and rural India with a focus on the underprivileged, but he has also made significant contributions to the Adani Group.”
Adani Capital has about $500 million in assets under management (AUM) and a network of more than 170 locations spread across eight states.
“Our goal has always been to support micro-entrepreneurs and first-time homeowners in Bharat, as well as to be the most cost-effective and convenient lender to our customers through the use of technology.” With Bain investing $1 billion in the company, we are now prepared to grow four times faster, Gupta said.
The acquisition is expected to completion in the fourth quarter of 2023, subject to regulatory and market approvals.
Despite the fact that MSME’s contribute 30% of GDP, according to the Ministry of Micro, Small, and Medium Enterprises, only 10% of MSMEs in India have access to a formal source of credit to support growth objectives, which is especially acute in rural areas.
On this transaction, Avendus Capital served as the only financial advisor to Adani Capital, Adani Housing Finance, and its shareholders. Rothschild was Bain Capital’s sole financial advisor on this transaction.
This deal underlines Bain Capital’s faith in India’s financial services sector. It has already made investments in companies like as Axis Bank, 360One (previously IIFL Wealth), Judo Bank, L&T Finance Holdings, Legacy Corporate Lending, and others.