Global private equity giants EQT, CVC Capital, and Bain Capital have shown keen interest in the ongoing major stake sale process at Aavas Financiers Ltd (formerly AU Housing Finance Ltd).
As per initial report, the deliberation of complete exit by NBFC’s twin promoters, Kedaara Capital and Partners Group, after jointly acquiring the firm over eight years ago. The due diligence for the proposed deal is underway with Jefferies acting as the appointed sell-side advisor.
While a strategic suitor exploring expansion in the financial services sector may have evaluated the opportunity, confirmation on their continued participation remains undisclosed.
Queries directed via email to Kedaara Capital, Aavas Financiers, and CVC Capital remained unanswered at the time of this publication, with updates pending upon responses.
Recent trends indicate heightened interest from global investors like Advent International, Warburg Pincus, Mubadala, and Ontario Teachers Pension Plan in financial services deals. Additionally, Torrent Group’s Torrent Investments expressed interest in the sale process of Reliance Capital under the insolvency and bankruptcy code.
Kedaara Capital and Partners Group, as promoters, collectively hold a 26.47 percent stake in Aavas Financiers. Should the entire stake be acquired by a new suitor, it would trigger the open offer threshold per Sebi norms, necessitating an additional acquisition of 26 percent from public shareholders and resulting in a change in control.
At the market cap of Aavas Financiers on July 10, valued at Rs 14,290 crore, the stake held by Kedaara Capital and Partners Group is estimated at Rs 3,782 crore. A controlling stake of at least 51 percent in the company would be valued around Rs 7,287 crore.
Both Kedaara Capital and Partners Group previously divested a portion of their stake through block deals earlier this year, selling 12.6 percent in Aavas Financiers for Rs 1,369 crore.
Bain Capital has investments in Adani Capital, L&T Finance, and 360 ONE (formerly IIFL Wealth and Asset Management) within the financial services domain. Conversely, CVC Capital has yet to venture into financial services domestically, despite leading the acquisition of global online retail trading platform OANDA.
Exploring Aavas Financiers
As per its website, Aavas, based in Jaipur, specializes in providing housing loans primarily in underserved markets across states like Rajasthan, Maharashtra, Gujarat, Madhya Pradesh, Haryana, Uttar Pradesh, Chhattisgarh, Uttarakhand, Punjab, Himachal Pradesh, Delhi, Odisha, and Karnataka. Presently, the company operates through a network of 371 branches.
In February 2016, a joint venture between Kedaara and Partners acquired Aavas Financiers Ltd for approximately Rs 950 crores. The firm was listed in October 2018, witnessing a share price surge of nearly 15 percent in the past six months.
Key shareholders in the public category include SBI Small Cap Fund (8.86 percent), UTI Flexi Cap Fund (3.06 percent), Amansa Holdings Private Ltd (3.10 percent), and ADIA (2.50 percent).
For FY23-24, the NBFC reported a net profit of Rs 490.69 crore and revenues amounting to Rs 2,017.50 crore. Notably, there was a 20 percent increase in disbursements to Rs 1,890 crore during the January-March quarter, with assets under management rising by 22 percent to Rs 17,300 crore in the same period.