In a groundbreaking development in the world of finance, global private equity firm Bain Capital is reportedly in advanced talks to acquire Adani Capital, the shadow banking arm of the renowned Gautam Adani’s conglomerate, in a deal valued at a whopping Rs 1,500 crore. The Economic Times has disclosed that Bain Capital has emerged as the leading contender in the acquisition process, beating out other potential bidders like Carlyle and Cerberus Capital Management. The acquisition comes as Adani Group looks to streamline its business interests, with a strategic focus on core infrastructure while conserving cash.
Adani Capital, spearheaded by Gaurav Gupta, an esteemed former Lehman Brothers and Macquarie investment banker who joined the conglomerate in 2016, has garnered significant attention in recent months. The company has been up for sale, attracting interest from various private equity groups. Notably, the management team, led by Gupta, currently owns around 10 percent of the company, while the majority, approximately 90 percent, is owned by Gautam Adani.
The shadow banking entity has seen remarkable growth over the years. As of the end of the fiscal year 2023, Adani Capital reported assets under management amounting to a substantial Rs 3,977 crore, signifying a remarkable 63 percent increase from the previous year. The company’s book value has been estimated at Rs 800 crore, making the proposed acquisition deal of Rs 1,500 crore by Bain Capital twice its book value. Additionally, Bain Capital plans to inject an additional Rs 500 crore as primary capital to bolster the company’s future growth prospects.
Despite the anticipated exit of Gautam Adani from his investment, the fate of the existing management team remains uncertain. It is yet to be revealed whether they will retain a minority stake and continue to run the company under Bain Capital’s ownership.
In the fiscal year 2023, Adani Capital reported gross disbursements of Rs 2,482 crore and a total income of Rs 599 crore, with a commendable profit after tax of Rs 105 crore, showcasing its financial stability and growth potential.
Both Bain Capital and the Adani Group have chosen to remain tight-lipped regarding the details of the impending acquisition. Gaurav Gupta, the head of Adani Capital, has not responded to inquiries seeking clarification on the matter.
Sources familiar with the situation have highlighted the challenges faced by Adani Capital due to its association with the Adani Group. With several banks and lending institutions approaching their exposure limits to the conglomerate, Adani Capital has faced constraints in fund flow. The sale to Bain Capital is expected to alleviate these pressures, providing the shadow banking entity with newfound flexibility and resources to expand its operations.
To facilitate the smooth execution of the sale process, Adani is collaborating with Avendus, a leading financial services firm.
Adani Capital offers a diverse range of retail and wholesale lending services across six verticals. Notably, the agricultural sector stands as its largest vertical in terms of assets under management.
The potential acquisition of Adani Capital by Bain Capital marks a significant milestone in the financial industry. With Bain Capital’s vast expertise and resources, combined with Adani Capital’s robust performance and growth potential, this deal is poised to have far-reaching implications for both companies. As the negotiations enter their final stages, the financial world eagerly awaits the outcome of this game-changing acquisition.
The potential acquisition of Adani Capital by Bain Capital has sent ripples of excitement throughout the financial industry, with experts eagerly analyzing the implications of this deal. For Bain Capital, the acquisition of Adani Capital represents a strategic move to expand its presence in the Indian market and gain access to a well-established shadow banking entity with significant growth potential. With Adani Capital’s impressive track record and expertise in retail and wholesale lending, Bain Capital can leverage its resources and global network to unlock new opportunities and propel the company to even greater heights.
On the other hand, the deal could prove transformative for Adani Capital, offering a fresh start under Bain Capital’s ownership. The additional primary capital injection of Rs 500 crore can serve as a catalyst for Adani Capital’s expansion and diversification into new business segments, further solidifying its position as a prominent player in the financial sector.
Furthermore, the acquisition aligns with Gautam Adani’s vision to concentrate on core infrastructure projects. By divesting Adani Capital, he can streamline the group’s portfolio, freeing up resources and attention to focus on the conglomerate’s core businesses.
