More than eight years after picking up a majority stake in Avendus Capital, US private equity major KKR has revived the process to exit the leading home grown financial services firm and roped in a sell-side advisor, multiple industry sources privy to the development told Moneycontrol.
"KKR has been invested for a very long time in Avendus Capital and feels the timing and environment is right now to explore a complete exit. They have engaged investment bank Nomura recently to sell their controlling stake in the firm," said one of the persons above.
In November 2015, KKR picked up a controlling stake in Avendus Capital from existing investors. According to media reports, the investment giant paid around $115-$120 million for a 58 percent stake, implying a valuation of around $206 million for the entire firm back then.
According to Acuite Ratings & Research, KKR held around 63 percent stake in Avendus Capital as on March 31, 2023.
Two other persons confirmed the private equity firm's exit plans and the appointment of Nomura.
"Other investors in Avendus Capital including Gaja Capital and some members of the founding group may also opt to join KKR as part of the proposed exit, as a result of which the combined stake up for grabs for potential suitors could be in the range of 70 percent to 75 percent," one of them elaborated.
A fourth person familiar with ongoing negotiations added that the preference would be to tap private equity funds for the combined stake on sale.
"Overseas suitors from regions like Japan may also express interest in a transaction of this nature. This may also be an opportunity for a strategic bidder without a strong investment banking business," the fourth person added.
Last year saw a Japanese player partnering with an Indian financial services firm with investment banking capabilities, when Daiwa Securities Group picked up a minority stake in Ashok Wadhwa-led Ambit Private Ltd which is present in investment banking, asset management, institutional equities and SME lending.
All the four persons above spoke to Moneycontrol on the condition of anonymity.
When contacted via email, KKR and Nomura declined to comment.
Avendus Capital said, "We do not comment on stories of this nature as per policy." Gaja Capital could not be reached for an immediate comment.
Some of the key deals advised by Avendus Group in the past few years include Bain Capital's acquisition of Adani Capital, Carat Lane stake sale to Titan for Rs 4,621 crore, Rs 2,700 cr stake sale by Warburg Pincus in CAMS (Computer Age Management Services) and acting as a placement agent to Sustainable Energy Infra Trust, with offer size of $273 million, co-sponsored by Mahindra Group and Ontario Teachers.
A closer look at the Avendus Group
Avendus Group, co-founded by Gaurav Deepak (the CEO) , Ranu Vohra (the Executive Vice-Chairman) and Kaushal Aggarwal started operations in 1999, through its flagship company Avendus Capital Pvt Ltd.
It offers solutions in investment banking, wealth management, asset management, credit solutions and institutional equities and is present in 10 cities across India, the United States and Singapore with a total workforce of 550-600 people.
According to a report by Acuite Ratings & Research dated November 28, 2023, "With a consolidated net worth of Rs 1,541 crore and gearing of 0.53 times as on March 31 2023, the group has healthy capitalisation levels and is adequately positioned to support the growth of its businesses."
"Acuité takes note of acquisition of the Institutional Equities business of Spark Capital Advisors (India) Private Limited, deal concluded in Q3FY23. Acuité believes that this acquisition will help Avendus Group in further diversifying their service offerings and improve the revenue profile," the report added.
On January 30, 2022, Moneycontrol was the first to report that the Avendus Group was planning to acquire a significant majority stake in the institutional equities and research vertical of Chennai-based Spark Capital.
As per the Acuite report mentioned above, for FY23, on a consolidated basis, Avendus posted a PAT of Rs 137.73 crore, with a total income (net interest income plus other income) of Rs 952.23 crore and total assets of Rs 3016.52 crore.
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