MC EXCLUSIVE Blackstone, Advent, EQT and Kedaara show interest in Axis Finance

In recent years, from FY22 – FY24, the bank has infused Rs 1,100 crore into Axis Finance.

Four major private equity funds have shown interest in picking up a significant minority interest in Axis Finance. Highly placed sources say Blackstone, Advent, EQT and Kedaara have placed non-binding bids to acquire around 20% stake in the Axis Bank promoted non-bank lender.

“Deal talks are at initial stages and there is still a lot of processes to go through,” said a source aware of the development.

Morgan Stanley is said to be managing the divestment process on behalf of Axis Bank.

Emails sent to Axis Finance, Blackstone, Advent, Kedaara and EQT remained unanswered till publishing the article.

On February 28, Moneycontrol reported that Carlyle and Advent have shown interest in acquiring a 50% stake in Axis Finance, as it was initially planned that Axis Bank will sell at least a 50% stake. However, after a few rounds of discussions with interested buyers, the stake offered was reduced to about 20%, as potential investors were keen that Axis Bank holds a controlling stake till such time that a smooth transition could be made to a new investor.

“While Axis Finance is a good franchise, it might need the support and branding of Axis Bank at least for a few years post the divestment. Hence it was decided recently that the divestment process will be initiated by offering significant minority shareholding, ultimately leading to a controlling stake in about 2 – 3 years after the first transaction,” said a banker aware of the negotiations.

It is learnt that the incoming shareholder may be offered one or two board seats along with the right to nominate members of critical board committees.

Though quite healthy on the capital front with 20.9 percent capital adequacy, sources say there could be a trigger for Axis Bank to infuse fresh capital in Axis Finance during the course of the current fiscal (FY26). However, it is not clear whether the regulator would permit Axis Bank to participate in a round of fund raising at Axis Finance, especially given that a draft circular issued by the Reserve Bank of India in October last year was also not in favour of banks investing in non-banking finance businesses.

In an interview to Moneycontrol on January 3, 2025 (https://www.youtube.com/watch?v=XyR8GcBRe6A), Amitabh Chaudhry, MD & CEO of Axis Bank, he said it was too early to speculate the fate of Axis Finance. “We have been infusing equity into Axis Finance consistently. The RBI has been telling us that they would not like us to continue putting money into this subsidiary,” he said, adding that at some stage the regulator would want the bank to dilute its stake in the NBFC.

In recent years, from FY22 – FY24, the bank has infused Rs 1,100 crore into Axis Finance. In November 2024, the bank infused Rs 598 crore into the non-bank subsidiary. This apart, it supports the subsidiary through funding lines for its business.

Established in 2010 as a subsidiary of Axis Bank, Axis Finance’s assets under management stood at Rs 39,079 crore as on March 31, 2025. Initially set up as a wholesale lender, it was only in 2019 the company started focusing on retail loans such as loans against property, home loans and personal loans. The entry into to retail was largely to de-risk the company’s loan book, which was very vulnerable to business risks until seven years ago.