Warburg Pincus, ADIA to invest up to Rs 7,500 crore in IDFC First Bank

IDFC First Bank

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IDFC First Bank on April 17 approved a plan to raise funds of up to Rs 7,500 crore by issuing preferential shares to affiliate firms of Warburg Pincus and the Abu Dhabi Investment Authority (ADIA).

The entities will invest the funds for a combined 15% stake in the mid-sized private lender which has 971 branches, a loan book of Rs 2.31 lakh crore and a deposit base of Rs 2.27 lakh crore.

The proposed fund raise will increase the book value per share of IDFC FIRST Bank by 2.3%, it said in a statement.

Currant Sea Investments B.V., an affiliate company of global growth investor Warburg Pincus, will invest Rs 4,876 crore for a stake of 9.8%. While Platinum Invictus B 2025 RSC, a wholly-owned subsidiary of ADIA, will invest about Rs 2,624 crore for a 5.10% stake, the bank said.

"An aggregate of up to 124,98,80,388 fully paid-up compulsorily convertible cumulative preference shares of face value of Rs 10 each (“CCPS”), at a price of Rs 60 per CCPS aggregating up to Rs 7,500 crore" will be issued, the bank said.

At 10:55 am on April 17, IDFC First Bank shares on BSE were trading 0.6% higher at Rs 63.75 apiece.

V Vaidyanathan, Managing Director & CEO, IDFC FIRST Bank said: “The Bank has firmly moved into profits and is now at a pivotal stage, where our income growth is expected to consistently exceed OPEX growth, leading to improved operating leverage. We expect many businesses which are in the investment stage to turn profitable with scale. It is great to have Warburg Pincus back and to welcome a wholly-owned subsidiary of ADIA as our shareholder. We thank them both for believing in us and our future growth plans and for investing in us even under volatile global situations. We believe only by building a strong, respected franchise loved by customers and supported by strong unit economics, we will deliver sustainable long-term returns to our stakeholders.”

IDFC First Bank said that over the last six years its deposits grew 6x, loans and advances doubled, and CASA ratio has significantly improved from 8.7% to 47.7%. PAT rose from a loss of Rs 1,944 crore in FY19 to a profit of Rs 2,957 crore in FY24, it said.

"However, profitability dipped in 9MFY25 due to industry wide challenges in microfinance, which the bank has navigated well. With this fund raise, the overall capital adequacy will increase from 16.1% to 18.9%, (CET-1 ratio at 16.5%, calculated on the capital position of the Bank as of December 31, 2024), strengthening the Bank’s balance sheet and positioning it for strong and self-sustaining profitable growth," the lender said.

Vishal Mahadevia, Managing Director, Head of Asia Private Equity, and Global Co-Head of Financial Services, Warburg Pincus, said, “We believe the Indian banking sector presents an exciting opportunity and is poised for long-term growth. At Warburg Pincus, we have a long track record of partnering with exceptional teams. We have known the IDFC First Bank team for over a decade dating back to their early days and have closely seen the build out of the bank. We are excited to re-invest behind the IDFC First Bank team to support them in the next phase of growth and sustainable ROE improvement.”

Hamad Shahwan AlDhaheri, Executive Director of the Private Equities Department at ADIA, said, “IDFC First Bank has firmly established itself as one of India's leading private sector banks, backed by a seasoned management team. It has expanded both its technology and branch infrastructure over number of years and is well positioned for the future. This investment is aimed at supporting the bank's continued growth, enabling it to meet the rising demand for financial products in the country.”