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Bain Capital in Advanced Talks to Acquire Adani Capital for Rs 1,500 Crore

Bain Capital in Advanced Talks to Acquire Adani Capital for Rs 1,500 Crore

Recent reports suggest that Bain Capital, a private equity firm, is in advanced negotiations to acquire Adani Capital, a shadow bank owned by Gautam Adani. Earlier reports indicated that Bain Capital, along with Carlyle Group and Cerberus Capital Management, were in the final stages of submitting binding bids for the acquisition.

While the details of the negotiations and the potential deal are not yet available, the involvement of Bain Capital in advanced talks indicates their interest in acquiring Adani Capital. As the discussions progress, more information regarding the acquisition is likely to emerge shortly.

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As per The Economic Times, Gautam Adani is reportedly planning to divest non-core businesses to preserve cash for the company’s core operations. Adani, who holds a 90 percent stake in the firm, is seeking to streamline the company’s focus on essential operations.

Gaurav Gupta, a former investment banker from Lehman Brothers and Macquarie, is another significant shareholder in the company, holding approximately 10 percent of the company’s shares. The move to exit non-core businesses aligns with Adani’s strategic objective of optimizing resources and enhancing the performance of the core operations.

According to the financial daily, Bain Capital is anticipated to pay up to Rs 1,500 crore for the acquisition of Adani Capital, which is twice its book value. Additionally, Bain Capital plans to infuse Rs 500 crore of primary capital through equity.

However, it remains uncertain whether the management team will retain a minority stake in the company. The specifics regarding the management team’s involvement and any potential stake they may retain have not been clarified at this stage.

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According to reports, Adani is said to be collaborating with Avendus on the sale process. Avendus is an investment banking firm known for providing advisory services in mergers and acquisitions, among other financial transactions. Their involvement suggests that Adani has engaged professional expertise to facilitate the sale of Adani Capital, indicating a strategic approach to the divestment process.

Adani Capital is involved in retail and wholesale lending operations across six different verticals, with the farm sector being the largest among them. In addition to catering to the agricultural industry, Adani Capital provides loans to small and medium businesses. The company has a presence in nine states, including Gujarat, Maharashtra, Rajasthan, Karnataka, Andhra Pradesh, Telangana, Madhya Pradesh, Uttar Pradesh, and Tamil Nadu. This regional coverage allows Adani Capital to serve a diverse customer base across multiple states in India.

In conclusion, the ongoing discussions regarding the potential acquisition of Adani Capital by Bain Capital highlight the strategic moves being made by Gautam Adani to optimize the company’s operations.

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By divesting non-core businesses and focusing on core operations, Adani aims to preserve cash and enhance the performance of the company. The reported valuation and infusion of primary capital by Bain Capital indicate a positive outlook for Adani Capital’s prospects.

Furthermore, Adani Capital’s strong presence in various sectors, including the farm sector and lending to small and medium businesses, underscores its diversified portfolio and potential for growth. With a significant presence in multiple states across India, the company has a broad customer base and regional reach.

As the sale process progresses and additional details emerge, the outcome of the acquisition and its impact on Adani Capital’s future trajectory will be closely watched by industry observers and stakeholders alike.

In summary, Adani Capital has witnessed significant growth in its assets under management (AUM), reaching Rs 3,977 crore by the end of FY23, representing a substantial 63 percent increase compared to the previous year. The estimated book value of the company stands at Rs 800 crore, reflecting the value of its underlying assets.

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Led by Gaurav Gupta, a former investment banker from Lehman Brothers and Macquarie, Adani Capital has made remarkable strides since its establishment seven years ago. Gupta joined the Adani conglomerate in 2016 and has played a pivotal role in the company’s growth and operations. The management team, including Gupta, collectively holds approximately 10 percent of the company’s shares, while Gautam Adani, the founder of the conglomerate, owns around 90 percent.

 

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