Cliffhanger sale of KKR - backed Avendus Capital: Carlyle back in fray as talks with Mizuho slow down

Cliffhanger sale of KKR - backed Avendus Capital: Carlyle back in fray as talks with Mizuho slow down

In a fresh twist to the ongoing , protracted race for acquiring a majority stake in KKR - backed diversified financial services firm Avendus Capital, negotiations with Japan's Mizuho Financial Group, widely seen as a front-runner, have slowed down in recent weeks, leading to the re-entry of the other key suitor private equity firm Carlyle, multiple industry sources in the know told Moneycontrol on the condition of anonymity.

On February 20 , 2024, Moneycontrol was the first to report that KKR had revived the process to exit the leading home-grown firm

Also Read: KKR revives process to exit Avendus Capital; onboards Nomura as advisor

" Negotiations with Mizuho Financial Group had reached a very advanced stage and both parties were said to be close to a final agreement. But differences, not related to valuation, but over softer terms of the deal, seem to have led to the lack of progress of late ," said one of the persons above, adding that the existing differences do not necessarily mean that Mizuho is out of the race.

According a second person, the "softer terms" in a "people-centric" business like Avendus Capital, with highest revenues coming from the investment banking segment, may be linked to aspects like employment contracts, potential restructuring of the target business, exit strategies, shareholder rights, day-to-day management of operations, integration issues and other terms.

" KKR - backed Avendus Capital has re-opened talks recently with Carlyle and meetings have been held in this regard. This transaction has seen many twists and turns, and it remains to be seen if this fresh attempt will lead to a deal. More clarity can be expected in the next few weeks on which bidder finally has the edge and offers the best combination of valuation and rights. A key aspect is no one has got exclusivity as yet. Also in terms of financials, Avendus Capital has had a better than expected outing in FY25," a third person told Moneycontrol.

Yes Bank and PNB Housing Finance are some of the portfolio firms of Carlyle in the financial services space in India.

A fourth person added, " In case a majority stake sale does not work out with either Carlyle or Mizuho Financial Group, controlling shareholder KKR does have the option to defer the process or sell part stake in a pre-IPO round and explore a listing later depending on market conditions. But an IPO is a very distant possibility as it comes with its own challenges in terms of firm readiness and doesn't solve the desired outcome of a full exit at one go. "

" The UBS-360 ONE WAM deal has just been announced. It's a vibrant market when it comes to m&a in the financial services space and the shareholders of Avendus Capital will have to keep that in mind," a fifth person said confirming that both Carlyle, back in the reckoning, and Mizuho were contenders currently.

All the five persons above spoke to Moneycontrol on the condition of anonymity.

KKR, Avendus Capital, Mizuho Group and Carlyle declined to comment in response to an email query from Moneycontrol.

Also Read: 360 ONE WAM, UBS ink wealth management deal; UBS to acquire warrants equal to 4.95% stake in firm

On a consolidated basis, Avendus Capital, founded in 1999 by Gaurav Deepak, Ranu Vohra and Kaushal Aggarwal, had a total income of Rs 1,035 crore and net profit of Rs 170 crore for the nine months ended fiscal 2025, against Rs 1,012 crore and Rs 118 crore, respectively, in fiscal 2024. The stats are as per a March 18 report by ratings agency Crisil.

Incidentally, boutique investment bank Dam Capital listed on the bourses in December 2024 with an Rs 840 crore IPO, which was subscribed 82 times, but since then the markets have been volatile.

On March 3, Moneycontrol had reported that KKR led Avendus Capital and Mizuho were in the final stages of a deal, with the Japanese major having pipped competitors such as Carlye and Nomura Holdings.

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

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. Gaja Capital also hold a minority stake in the firm along with other investors and the original promoter group.
The March report by Crisil highlights the contribution of a various verticals under the Avendus Capital umbrella.

"The ongoing diversification in business should support profitability over the medium term. In the nine months of fiscal 2025, investment banking contributed ~53%, credit solutions (structured credit and syndication) ~28%, institutional equities ~21%, wealth ~12% of operating PBT, while the asset management business was incurring loss. This is against 84% of PBT from investment banking in fiscal 2023. The acquisition of Spark has supported the profitability, along with augmenting the equity capital markets (ECM) offering, thus widening available solutions for their customers. The credit solutions business through the alternate investment fund (AIF) route is also expanding. The wealth management and asset management businesses are in a relatively nascent stage. Ability to scale up the non-IB businesses will be key to strengthening and diversifying profitability," the report said.