US private equity group Bain Capital has agreed to buy 90 per cent of Adani Capital and Adani Housing, effectively acquiring the full ownership of the Gautam Adani family's stake in the company.
Gaurav Gupta will continue to serve as managing director and chief executive of Adani Capital and retain a 10 per cent stake in the company, Bain said in a statement on Sunday.
Boston-based Bain Capital has also committed $120 million in primary capital to the company and will immediately make available a $50 million liquidity line in the form of non-convertible debentures.
The financial terms of the deal were not disclosed, but India's Business Standard newspaper said Bain is paying 14.4 billion rupees ($176 million) and that company was valued at 16 billion rupees.
Adani Capital was founded in 2017 to serve as a lending platform for Micro, Small and Medium Enterprises (MSMEs) and entrepreneurs in India. The company has about $500 million in assets under management and more than 170 branches across eight states.
“The team and I are very pleased to welcome a partner like Bain Capital who shares our vision of making affordable finance available to our customer segment with a strong focus on customer literacy and education … we are now equipped to grow 4x from here,” said Mr Gupta.
Rishi Mandawat, a partner at Bain Capital said Mr Gaurav and the Adani Capital and Adani Housing team “have built a scale lending business that supports entrepreneurialism and is trying to solve the $300 billion+ unmet retail MSME credit demand in the country”.
India's MSMEs contribute account for about 30 per cent of the country's gross domestic product, but only 10 per cent of them have access to a formal source of credit to support their growth, Bain said, citing Indian government data.
“The company has strong business fundamentals, an experienced team, with ability to serve and expand to core segments like agriculture, housing and to underbanked rural areas,” Mr Mandawat said.
“We see compelling opportunities to partner with Gaurav and team to support and facilitate Adani Capital’s next phase of growth by providing access to significant capital, strategic and operating resources, and deep experience partnering with financial services businesses in India and across the globe.”
The transaction is expected to close in the fourth quarter of this year, pending regulatory and market approvals. It will help the Adani Group to focus on its core businesses related to infrastructure in the world's fifth-largest economy.
“I am very happy that a credible investor like Bain Capital is stepping in now and this will help the business grow manyfold from here,” said Gautam Adani, chairman of the Adani Group.
The deal comes following a tumultuous year for Mr Adani, who had to contend with allegations from US short-seller Hindenburg Research last year that accused his conglomerate of “a brazen stock manipulation and accounting fraud scheme”, accusations he strongly refuted.
Despite the Adani Group calling the accusations “a malicious combination of selective misinformation and stale, baseless and discredited allegations”, the short-seller's comments wiped out billions of dollars from the market value of the group's key shares.
The fallout from the short-seller attack led to the wealth of Mr Adani to plunge in January after he became Asia's richest man and the world's third-richest person.
His net worth dropped to below $50 billion in February this year for the first time since March 2021, as the stock rout in his eponymous group of companies continued.
His wealth has recovered to $60.8 billion, but he is still down $59.8 billion year to date, according to the Bloomberg Billionaires Index. He is now the 22nd richest person in the world and the second wealthiest man in India trailing Mukesh Ambani, as of July 24.