General Atlantic buys stake in India's IIFL Wealth
General Atlantic has agreed to pay up to INR11.2 billion ($173 million) for a minority interest in IIFL Wealth Management (IIFLW), a subsidiary of IIFL Holdings, the Indian financial services group formerly known as India Infoline.
According to a regulatory filing, General Atlantic will subscribe to a combination of newly-issued shares and warrants in IFFLW, and also acquire a portion of shares held by company management. It is expected to end up with a 21.61% stake on a fully diluted basis and assuming full conversion of warrants and options.
IIFL Holdings said the investment would support the continued expansion of the wealth management platform. Founded in 2008, IIFLW advises more than 8,600 clients on the management of around $12 billion in assets. Services are channeled through over 150 relationship managers.
The company wants to broaden the range of products and services it offers to customers. LiveMint cited a Morgan Stanley report that estimates Indian households will invest $300 billion in local equity markets over the next 10 years compared to $50 billion over the previous 10 years.
"As the market opportunity for wealth management in India grows, we believe the company is well-positioned to continue its leadership position as the platform of choice for Indian investors," Sandeep Naik, managing director and head of India at General Atlantic, said in a statement.
IIFL Holdings is a retail and institutional brokerage that also supports other businesses, including private equity. The Carlyle Group bought a 9% stake in IIFL for about $37.5 million in 2011. Earlier this year, Canada-based Fairfax Financial Holdings offered to buy a 26% interest in the business for INR16 billion.
Private equity investments in India's financial services sector have tended to focus on non-banking financial companies (NBFC) in recent months. In September, Bain Capital has acquired a 10.3% stake in L&T Finance Holdings for approximately INR13.04 billion. This followed TPG Capital's full exit from Shriram City Union Finance as it sold a 20.37% stake to Apax Partners for INR23 billion.
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