Bain acquires India's Adani Capital

The private equity firm is committing USD 120m in primary capital and making a USD 50m liquidity line available in the form of non-convertible debentures. The proposal reportedly beat out rival bidders including The Carlyle Group and Cerberus Capital Management.

The transaction will see Bain acquire 100% of the Adani family’s private investments in Adani Capital and Adani Housing, which are addressed as a single entity. The plan is to position it as a standalone company – separate to Adani Group – to expand lending to underserved businesses and the agriculture and affordable housing segments. The company estimates it is now set to grow 4x.

Adani Group has come under pressure in recent months after a short seller accused it of stock price manipulation and accounting fraud. The accusations were strongly refuted, but various listed subsidiaries have plummeted in value.

Gaurav Gupta, CEO and managing director of Adani Capital, will roll over his entire stake in the new equity capital structure, retaining his leadership roles. Gupta, formerly of Macquarie Capital and Lehman Brothers, founded Adani Capital in 2017 as Adani Finserv.

“I have known Gaurav since his days as an investment banker. He wanted to become an entrepreneur and I backed him,” Gautam Adani, Chairman of Adani Group, said in a statement.

“He has not only built a good financial services business with a focus on the underserved in semi-urban and rural India but has also valuably contributed to the Adani Group. I am very happy that a credible investor like Bain Capital is stepping in now and this will help the business grow manyfold from here.”

Adani Capital aims to democratise access to affordable, convenient lending for a new generation of micro and small to medium-sized enterprises (MSMEs) and entrepreneurs in India. It has about USD 500m in assets under management, a network of more than 170 branches across eight states, and a team of around 2,500 professionals.

The core targets are micro-entrepreneurs and first-time homeowners in lower-income and regional areas. Much of the business model envisions leveraging technology to make the lending process more economical and convenient. There is a strong focus on customer literacy and education.

Adani Capital estimates there is more than USD 300bn in unmet retail MSME credit demand in India. The volume of MSMEs is said to be increasing on the back of growing interest in entrepreneurialism and growing consumption rates. MSMEs currently represent about 30% of national GDP, according to government data, although only 10% have access to a formal source of credit.

“The company has strong business fundamentals, an experienced team, with ability to serve and expand to core segments like agriculture, housing and to underbanked rural areas,” Rishi Mandawat, a partner at Bain, added.

“We see compelling opportunities to partner with Gaurav and team to support and facilitate Adani Capital’s next phase of growth by providing access to significant capital, strategic and operating resources, and deep experience partnering with financial services businesses in India and across the globe.”

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Financials
• Buyouts
• India
• Bain Capital Asia
• NBFCs
• Financial Services
• SME