Aavas Financiers: EQT, CVC Capital & Bain in the fray as promoters Kedaara, Partners Group explore full exit

Kedaara Capital and Partners Group, classified under the promoter category, own a combined 26.47 percent stake in Aavas Financiers.

Top global private equity firms EQT, CVC Capital and Bain Capital have independently expressed interest in the ongoing mega stake sale in the works at Aavas Financiers Ltd ( formerly known as AU Housing Finance Ltd), three persons in the know told Moneycontrol.

On July 3, Moneycontrol was the first to report that the twin promoters of the NBFC, Kedaara Capital and Partners Group, are weighing a complete exit eight years after jointly acquiring the firm more than eight years back. The report had added that due diligence was being conducted for the proposed deal and Jefferies had been appointed as the sell-side advisor.

One of the persons above said a strategic suitor looking to expand in the financial services segment may have also evaluated the opportunity, but it was immediately unclear if the firm was still in the fray.

When contacted, Partners Group , EQT and Bain Capital declined to comment.

Email queries sent to Kedaara Capital, Aavas Financiers and CVC Capital were left unanswered at the time of publishing this article, which will be updated as soon as we hear from them.

In recent times, other global investors like Advent International, Warburg Pincus, Mubadala and Ontario Teachers Pension Plan have also evinced interest in financial services deals or struck them. Torrent Group's Torrent Investments had expressed interest in the sale process of Reliance Capital under the insolvency and bankruptcy code.

Kedaara Capital and Partners Group, classified under the promoter category, own a combined 26.47 percent stake in Aavas Financiers.

If the entire stake is sold to an incoming suitor , it would trigger the open offer threshold as per Sebi norms to acquire an additional 26 per cent from public shareholders and result in a change in control.

Based on the market cap of Aavas Financiers at the end of day's trade on July 10, which stood at Rs 14,290 crore, the stake owned by Kedaara Capital and Partners Group is worth Rs 3,782 crore. At these levels, a majority stake of at least 51 per cent stake in the firm is worth around Rs 7,287 crore.

Incidentally, both Kedaara Capital and Partners Group have diluted part stake earlier in the year via the block deal route. In March, both firms divested 12.6 per cent in Aavas Financiers for Rs 1,369 crore.

In an interview to Moneycontrol in April, Jean Salata, Chairperson of EQT Asia and Head of Private Capital Asia, named financials as one of the three sectors where EQT is considering deploying $5 billion in India this year. The other two segments are IT and pharma/healthcare.

In the financial services space, Bain Capital backs Adani Capital, L&T Finance and 360 ONE ( formerly IIFL Wealth and Asset Management) .

On the other hand, CVC Capital has not placed any financial services bets as yet domestically, even though the India team steered the acquisition of global online retail trading platform, currency data and analytics company OANDA.

A closer look at Aavas

According to its website, Jaipur based Aavas is engaged in the business of providing housing loans, primarily, in under-served markets which include the states of Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh, Uttarakhand, Punjab, Himachal Pradesh, Delhi, Odisha, and Karnataka. Currently, the firm is operating with a total of 371 branches, the website added.

In February 2016, a Kedaara-Partners JV acquired Aavas Financiers Ltd for around Rs 950 crores, according to media reports. The firm was listed in October 2018 and its share price has risen by nearly 15 per cent in the last six months.

Some of the shareholders of Aavas in the public category include SBI Small Cap Fund ( 8.86 per cent), UTI Flexi Cap Fund ( 3.06 per cent), Amansa Holdings Private Ltd ( 3.10 per cent) and ADIA ( 2.50 per cent)

For FY23-24, the NBFC had a net profit of Rs 490.69 crore and revenues of Rs 2,017.50 crore. It reported a 20 percent uptick in disbursements to Rs 1,890 crore during the January-March quarter. Assets under management also rose 22 percent to Rs 17,300 crore during the same period.

Also Read: Aadhar Housing CEO: Eventually it will be a two-horse race between us and Aavas Financiers