Mizuho makes a binding bid for Avendus Capital

People aware of the matter said Mizuho’s bid could value Avendus Capital in the ballpark of Rs 6,000–6,500 crore

After Nomura Holdings submitted a binding bid for Avendus Capital, Mizuho Financial Group has also furnished its final bid for the company. Best known for its investment banking practice, people aware of the matter said Mizuho’s bid could value Avendus Capital in the ballpark of Rs 6,000–6,500 crore. Mizuho plans to take full control over the homegrown firm. The bid is said to have come through by Friday last week and is a binding agreement.

On December 18, Moneycontrol reported that Nomura was the first to place a binding bid for Avendus Capital at a valuation of Rs 5,000–6,000 crore.

US private equity major KKR, which holds a controlling stake of over 60 percent, along with a few other investors such as Gaja Capital and Yogesh Mahansaria, founder and CEO of Alliance Tire Group, have placed their shares for sale, roughly representing 80 percent stake in Avendus Capital. Founder promoters namely Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal, may also offer their shares for sale to the interested buyer, though they may retain management control in the company for a few years. “Aspects related to management control and who will head the company post acquisition are still under discussion,” said a person aware of the matter.

Golden handshake clause

However, it is gathered that the sale consideration being offered by interested investors--- so far Nomura and Mizuho--- include elements of a ‘golden handshake’ component as a few senior management executives may not stay with the company post the deal. “A few CXO level executives have expressed their desire to pursue alternative outside Avendus once the transaction concludes,” a person aware of the matter confirmed.

“We are still in the process and cannot comment on specifics. We will keep you posted if there is any material development,” said an official spokesperson of Avendus Capital over an email when asked for comments on the latest development. "We have no comment," said an official spokesperson for Mizuho.

More bids ahead

It is expected that around the first week of January, another bid could come from Carlyle. According to the people cited, the present dispensation at Avendus, including a few of its founders are rooting for Carlyle to pick up controlling stake in the company. “Being a financial investor, Carlyle might ensure continuity for the current team at Avendus, including its promoters,” said a person who didn’t want to be named. However, much will depend on valuations as the non-binding offer from Carlyle which was furnished around mid-July, wasn’t as compelling in terms of valuations when seen against that of Mizuho and Nomura. People aware of the matter say Carlyle’s bid was around Rs 4,500–5,200 crore.

It's not clear if TVS Credit Services Limited, a subsidiary of Venu Srinivasan led TVS Motors makes a bid for Avendus. “While TVS Credit showed some interest in the business, valuations offered so far didn’t come across as very enticing,” said another person who didn’t want to be named.