Private equity firm Bain buys Adani Capital

Boston-based private equity firm Bain Capital has announced the acquisition of a 90% stake in two of India’s leading financial firms, Adani Capital and Adani Housing.

The deal will completely buy out the private investments of the Adani family in these firms, Bain Capital said in a release.

Under the terms of the transaction, the chief executive officer and managing director of Adani Capital Gaurav Gupta will maintain his stake in both companies. Bain Capital will commit $120 million as primary capital to boost growth at these firms and offer an immediate liquidity line of $50 million via non-convertible debentures.

Financial details of the deal, which is expected to close in the last quarter of the current calendar year, were not disclosed.

“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, said. “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.”

Adani Capital has assets under management of nearly $500 million, about 170 branches across eight states, and a team of over 2,500 professionals.

Gautam Adani, chairman of Adani Group, said, “He (Gaurav Gupta) 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 manifold from here.”

Micro, small, and medium enterprises (MSMEs) constitute an important segment of the Indian economy, contributing about 30% of its gross domestic product, according to the ministry of micro, small, and medium Enterprises. Despite their potential, only 10% of MSMEs in India have access to a formal source of credit to support growth aspirations, particularly more acute in rural areas, a release from Bain Capital said.

“The team and I are very pleased to welcome a partner like Bain Capital who shares our vision of making affordable finance available to our customer segment with a strong focus on customer literacy and education. With Bain Capital committing ₹1,000 crore of capital in the company, we are now equipped to grow 4X from here,” Gupta said in the statement.

Avendus Capital was the financial advisor to Adani Capital, Adani Housing Finance, and their shareholders, while Rothschild advised Bain Capital.