Bain Capital, one of the largest private equity firms in the United States, has acquired a 90% stake in Adani Capital and Adani Housing, the non-banking financial arms of the Adani Group. The deal is worth $120 million and is expected to close in the fourth quarter of this year. The transaction will buy out 100% of the Adani family’s private investments in the company.
Gaurav Gupta, who currently serves as the Managing Director and CEO of Adani Capital, will retain the remaining 10% stake in the company. Bain Capital will also provide $50 million in liquidity through non-convertible debentures.
According to Quartz, Bain’s bid appear to have won over Carlyle Group and Cerberus Capital Management. The deal is seen as a way for Adani Capital to expand its lending operations and become a more standalone company. Bain Capital is a global private equity firm with a long history of investing in financial services companies. Why did Indian billionaire, Gautam Adani, agree to sell 90% of his shadow bank to Bain Capital?
Adani Group Gross Debt
The first reason is to raise capital. Indeed, Adani Capital is a relatively small non-banking financial company, and it may have been struggling to raise capital to expand its lending operations. By selling a 90% stake to Bain Capital, Adani will be able to raise $120 million in cash, which will give the company the financial resources it needs to grow.
The second reason is to gain access to Bain Capital’s expertise. Bain Capital is a global private equity firm with a long history of investing in financial services companies. By selling a stake to Bain Capital, Adani will be able to tap into the firm's expertise in lending and financial services. This could help Adani Capital to improve its lending operations and become a more successful company.
The third reason is to reduce political risks. Adani Capital has been the subject of increased scrutiny in recent months, and there have been concerns that the company's lending practices may be improper. By selling a stake to Bain Capital, Adani may be hoping to reduce the political risk facing the company. Bain Capital is a well-respected firm with a good reputation, and its involvement in Adani Capital could help to reassure regulators and investors.
The acquisition of Adani Capital is the latest in a series of investments by Bain Capital in India. In May, the firm invested $1 billion in GQG Partners, which is a large shareholder in the Adani Group.
The deal is also seen as a vote of confidence in the Adani Group, which has been the subject of increased scrutiny in recent months. In April, the Securities and Exchange Board of India (SEBI) launched an investigation into the group's fundraising practices. However, the Adani Group has denied any wrongdoing and has said that the investigation is a routine process. The group has also said that it is committed to transparency and good corporate governance.
The acquisition of Adani Capital is a significant development for the Adani Group and for Bain Capital. It remains to be seen how the deal will impact the group's lending operations and its overall financial performance.