Carlyle purchases 9% stake in India Infoline

The stake is worth about $37.5 million, based on IIFL's most recent trading price. The stock closed up 2.5% at INR71.35 on Wednesday ahead of the announcement. It is still down 13% so far this year, but is outperforming the broader market, which down 23%.

The transaction, which was made through Carlyle Mauritius Investment Advisors, part of Carlyle Asia Partners, will see the US private equity firm receive representation on IIFL's board.

IIFL offers advisory and execution services to more than one million investors through a network of 3,000 business locations in 500 cities and towns across India. The company's brokerage arm has a market share of 4% on the National Stock Exchange of India while its credit and finance business, which offers loan against shares, mortgage loans, housing loans, gold loans and equipment financing, had a loan book of more than INR39 billion ($778 million) as of June 30.

IIFL also offers advisory and portfolio management services to high net worth individuals and corporate clients and recently launched its first mutual fund.

"IIFL has built a leadership franchise with a nationwide distribution network in equity brokerage, insurance distribution and wealth management," said Devinjit Singh, a managing director at Carlyle, in a statement. "We look forward to supporting the company's growth plans including expansion of their financing and international businesses."

Carlyle Asia has made five major investments in the financial services sector, including Housing Development Finance Corp., India's largest mortgage lender. It reportedly paid $650 million for a 5.6% stake in 2007.

Private equity firms plowed over $1 billion into deals related to India's financial services in the first nine months of 2011, according to AVCJ Research. Notable investments include a consortium including Goldman Sachs, Everstone Capital, Ashmore Investment Management and CDIB Capital committing around $200 million to newly created non-banking finance company (NBFC) Indostar.

NBFCs have proved popular targets for private equity firms as the foreign ownership threshold is much higher than for commercial banks. According to the Reserve Bank of India, NBFCs are responsible for the equivalent of around 11% of total banking assets.

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• Topics
• South Asia
• Financials
• PIPEs
• India
• Financial Services
• PIPE
• The Carlyle Group
• HDFC Private Equity