In a significant move to bolster his business empire, embattled billionaire Tom Adani’s family has agreed to sell a 90% stake in Indian shadow banks, Adani Capital, and Adani Housing, to Boston-based investment firm, Bain Capital. The deal, valued at a reported $14.4 billion according to unidentified sources, will enable Adani to reduce his non-core businesses and focus on his infrastructure development ventures.
The acquisition was confirmed in a statement released by Bain Capital on Sunday. While specific details regarding the payment were not disclosed, Bain has committed $120 million in primary capital to the company and immediately offered a $50 million liquidity line in the form of non-convertible inventors.
#NewsFlash | Bain Capital has entered into a definitive agreement to acquire 90% of Adani Capital and Adani Housing.
The transaction will buy out 100% of the Adani family’s private investments in the company, with Gaurav Gupta fully rolling his stake in the company and… pic.twitter.com/gpMUF1mqRN
— CNBC-TV18 (@CNBCTV18Live) July 23, 2023
Gaurav Gupta Adani, the managing director and CEO of Adani Capital, will retain a 10% stake in the company and continue to serve in his current roles, as per the statement. This move aligns with Adani’s strategy to streamline his conglomerate’s operations and strengthen his financial position.
Bain Capital’s investment comes as a significant boost for Adani Capital, which has been steadily growing its presence in the Indian lending market since its inception in April 2017. The non-banking lender currently operates over 160 branches across India, providing affordable finance solutions to its customer segment.
Speaking about the acquisition, Gupta Adani expressed enthusiasm about the partnership with Bain Capital. He stated, “Bain Capital is a partner who shares our vision of making affordable finance available to our customer segment. With a strong focus on customer literacy and education, and with the infusion of capital from Bain, we are now equipped to grow 4X from here.”
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Adani’s decision to divest a significant stake in Adani Capital and Adani Housing is expected to help reduce liabilities on his conglomerate’s balance sheet. This move comes in the wake of a damaging short seller attack earlier this year, which prompted Adani to reevaluate and consolidate his range of businesses.
The billionaire’s main focus now lies in his infrastructure development ventures, which include the ambitious project of building a new airport on the outskirts of Mumbai. By shedding non-core businesses, Adani aims to strengthen the financial resilience of his conglomerate.
The deal also holds implications for the potential future growth of Adani Capital. Gupta Adani had earlier revealed plans for an IPO, potentially in 2024, with the company aiming to sell about a 10% stake and targeting a valuation of $2 billion. With the backing of Bain Capital, these plans may gain further traction, providing Adani Capital with more opportunities to expand its lending operations.
The acquisition by Bain Capital marks a strategic move in the Indian financial landscape and is likely to have a ripple effect on the market. As both companies join forces, the financial services sector can expect innovative solutions to cater to the growing demand for affordable finance in India.
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Overall, this acquisition signals a new phase of growth for Adani Capital and Adani Housing, while allowing Tom Adani to strengthen his conglomerate’s financial position and refocus on core infrastructure development projects.
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