American private equity company Bain Capital has disclosed that it just acquired Adani Capital with the goal of reaching India’s underbanked population. Bain Capital essentially bought the private share owned by Indian billionaire Gautam Adani’s family in Adani Capital and Adani Housing in a transaction reached in July.
Establishing a financing platform for India’s micro, small, and medium-sized firms (MSMEs), a rapidly expanding industry, is Bain Capital’s main goal in this purchase. The unique features of India’s economy, which include a sizable underbanked population, generate a need for cutting-edge financial platforms like Adani Capital, according to Barnaby Lyons, a partner and global co-head of Bain Capital Special Situations.
Lyons underlined that the company has a key role in the industry, concentrating on micro-loans to SMEs, agricultural, and affordable housing. Despite the difficulties connected with lending granularity, this particular industry benefits from good demand-supply dynamics.
According to figures supplied by Bain from the Indian government, the MSME sector in India produces around 30% of the nation’s gross domestic product (GDP), but only 10% of these businesses have access to official sources of finance for their development.
Partner at Bain Capital Rishi Mandawat emphasized Adani Capital’s success in creating a scalable lending operation that responds to the significant unmet credit demand of over $300 billion in the retail MSME sector of India.
Bain Capital provided Adani Capital with $120 million in basic capital as well as a $50 million non-convertible debenture liquidity line as part of the deal. As managing director and CEO of Adani Capital, Gaurav Gupta will stay in that position and have a 10% ownership part in the business.
After the Adani Group was accused of stock manipulation and fraud by the American short-seller company Hindenburg Research, a turbulent time ended with this transaction. Despite the issues, Bain Capital expressed optimism about the potential of the transaction and emphasized that Adani Capital’s activities would be run independently under its supervision.
In the event that the acquisition receives regulatory and market clearances, the closing is anticipated during the fourth quarter of this year.
