MC EXCLUSIVE Kedaara Capital-IFC combine emerges front-runner for minority stake buy in IPO-bound Axis Finance

On July 7, Moneycontrol had reported that Kedaara Capital, Blackstone, Advent and EQT had expressed interest in the transaction.

A consortium of Manish Kejriwal-led private equity firm Kedaara Capital and IFC, the largest global development institution backed by the World Bank group, has edged ahead of other suitors and emerged as the lead contender for a minority stake buy in Axis Bank's wholly owned subsidiary Axis Finance, multiple industry sources in the know told Moneycontrol.

"The deal has entered the final lap and the Kedaara Capital-IFC combine is poised to win the race," said one of the persons above.

A second person added, "Kedaara Capital and IFC are moving ahead and they are the favourites as of now. Negotiations are underway on the exact quantum of stake "

Another person confirmed the above and said that the proposed deal is likely to be signed in the following weeks, followed by an official announcement.

All the three persons spoke to Moneycontrol on the condition of anonymity. Moneycontrol could not independently verify the deal size or the valuation.

Email queries sent to Axis Bank, Axis Finance, Kedaara Capital and IFC remained unanswered at the time of publishing this article. Reminders have been sent and this article will be updated as soon as we hear from the parties.

On July 7, Moneycontrol had reported that Kedaara Capital, Blackstone, Advent and EQT had expressed interest in the transaction.

As of September 30, 2025, the overall assets under Axis Finance hit Rs 43,012 crore.

“On Axis Finance, we are going through a process… we will continue to evaluate our options and do the right thing. Axis Finance would become an upper-layer NBFC very soon, given the size of AUM we have, and that will also mean that we will ultimately get on this path of listing it at some stage in the future,” MD & CEO Amitabh Chaudhry said during the latest quarterly earnings conference call held on October 15 as per a report by Mint.

“Please be aware of the fact that Axis Bank is growing quite well. It had capital requirements, and we do need to ensure, as the owner of Axis Finance, that they get capital at the right time. So, we will continue to evaluate our options and do the right thing for Axis Finance,” Chaudhry added further.

The stake sale talks in Axis Finance are happening in the backdrop of the RBI recently removing the restrictions on overlap in businesses between banks and their arms.

“Based on feedback and review, the proposed bar on overlap in the businesses undertaken by a bank and its group entity is being removed. The circular envisages to streamline the activities being undertaken by banks and their group entities while providing more operational freedom to the banks and non-operative financial holding companies for equity investments and setting up group entities, respectively,” the regulator said.

As per the recent financial results of Axis Bank and its subsidiaries, Axis Finance overall assets under finance grew 23 percent YoY of which the retail book grew 24 percent YoY. The share of retail + MSME stood at 55 per cent of the total book v/s 53 per cent last year.

"87 percent of the book is secured in nature. Axis Finance remains well capitalized with total capital adequacy ratio of 19.82 percent. The book quality remains strong with net NPA at 0.42 percent.

The H1FY26 PAT of Axis Finance was Rs 385 crore, up 18 percent YoY from Rs 327 crore in H1FY25," the lender said in its exchange disclosure.

The financial services segment has been buzzing with deal activity over the past few months.

On October 18, RBL Bank announced that Emirates NBD would invest $3 billion for a 60 percent stake in the Mumbai based private sector lender, a story first reported by Moneycontrol on October 13.

The transaction is the largest ever foreign direct investment in the Indian financial services sector, largest ever equity fund raise in the Indian banking sector, largest fund raise via preferential issuance by a listed company in India and the first acquisition of majority interest in a profitable Indian bank by a foreign bank.

Federal Bank sealed a deal to sell a minority stake of up to 9.9 per cent to private equity giant Blackstone earlier on October 24 for around Rs 6,200 crore via the preferential warrants route. The deal was first reported by Moneycontrol on October 20.

Abu Dhabi's IHC picked up 43 per cent stake in Sammaan Capital ( earlier India Bulls Housing Finance) for around a $1bn earlier in the month.

In September, Sumitomo Mitsui Banking Corporation ( SMBC) picked up a 20 per cent stake in Yes Bank, making the Japanese giant the largest shareholder.

In the insurance segment, on September 16, Moneycontrol first reported that eight years after betting on private life insurer IndiaFirst Life Insurance, US private equity giant Warburg Pincus is in exit mode and has engaged investment bank Barclays to find a buyer for its 26 per cent stake.