Mizuho and KKR chalk out at final deal terms for Avendus Capital

A year-long negotiations with multiple potential M&A suitors might have just reached some finality in KKR-owned Avendus Capital. According to highly placed sources with knowledge of the matter, KKR and Mizuho Financial Group are the final stages of closing a deal which might see the Japanese financial major take a majority stake in Avendus Capital, piping competitors such as Nomura Holdings and Carlyle.

The final deal terms are under consideration. “This includes HR related aspects and the continuity of promoters after the deal closure,” said a banker aware of the talks.

To put things in context, Avendus was founded by Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal in 1999. Among the three promoters, who hold roughly 5 – 7 percent stake each, co-founder Gaurav Deepak is presently the CEO of Avendus Capital. “One of the promoters was initially not in favour of a strategic sale and was working out permutations to rope in one or more financial investors to take over the shares of exiting investors including KKR. With those talks hitting a rough patch, it would be interesting to see if this promoter opts to continue with the company post Mizuho’s entry,” said another person with knowledge of the matter.

The sources cited say negotiations on the finer aspects of the deal, notably continuation of the original promoters of the company and the role they would play post-acquisition by Mizuho are factors which are under consideration. “It is quite likely that if a promoter opts out of the company post the deal, Mizuho may impose a two-year handover clause for the exiting promoter. As the case is with KKR, Mizuho may also impose certain non-compete clauses for key managerial persons including the existing promoters of Avendus in case they decide to move out of the company,” said a source cited above.