Warburg Pincus invests $26.7m in IDFC First Bank
Warburg Pincus has invested INR2 billion( $26.7 million) in IDFC First Bank as part of an INR20 billion capital raise by the Indian lender.
Other contributors include ICICI Prudential Life Insurance, HDFC Life Insurance, Bajaj Allianz Life Insurance, and the bank’s holding company, according to a statement. Warburg Pincus is an existing investor in IDFC First Bank. As a result of the capital raise, its stake has increased marginally to 9.93%.
IDFC First Bank was the product of a merger in 2018 between IDFC Bank - previously the banking foray of the infrastructure-focused lender Infrastructure Development Finance (IDFC) - and Capital First, a non-banking financial company. Warburg Pincus and GIC Private were backers of Capital First.
IDFC First Bank has over 100 branches with major operations in urban centers in western and southern India. It registered INR21.1 billion ($279.5 million) in revenue for the nine months ended December 2019, an 50.2% year-on-year increase. However, an eight-week nationwide shutdown intended to curb the spread of COVID-19 is expected to lead to a rise in loan defaults and business closures that will adversely affect India's banking industry.
The new capital will bolster the bank’s capital adequacy ratio amid concerns about the financial health of Indian private banks. Earlier in the year, Yes Bank was put under government control with State Bank of India subsequently acquiring 49% of the PE-backed institution. Yes Bank’s woes, however, are said to be largely due to the worsening performance of borrowers in the real estate sector.
“One year after the merger, the bank has made strong progress across all strategic priorities and set a strong foundation for growth. Our retail lending was up 32% year-on-year and retail deposits up 157%. The bank has built strong intellectual property in its business in a focused manner,” said V. Vaidyanathan, CEO of IDFC First Bank.
IDFC First Bank shares closed at INR20.6 on May 4 following the announcement of the capital raise, which was made on May 1, a public holiday. Twelve months ago, the stock was trading at a 52-week high of INR50.65.
Warburg Pincus also recently increased its stake in Apollo Tyres. It continued a trend of PE players upping their stakes in Indian public companies.
More on South Asia
Latest News
Asian GPs slow implementation of ESG policies - survey
Asia-based private equity firms are assigning more dedicated resources to environment, social, and governance (ESG) programmes, but policy changes have slowed in the past 12 months, in part due to concerns raised internally and by LPs, according to a...
Singapore fintech start-up LXA gets $10m seed round
New Enterprise Associates (NEA) has led a USD 10m seed round for Singapore’s LXA, a financial technology start-up launched by a former Asia senior executive at The Blackstone Group.
India's InCred announces $60m round, claims unicorn status
Indian non-bank lender InCred Financial Services said it has received INR 5bn (USD 60m) at a valuation of at least USD 1bn from unnamed investors including “a global private equity fund.”
Insight leads $50m round for Australia's Roller
Insight Partners has led a USD 50m round for Australia’s Roller, a venue management software provider specializing in family fun parks.