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US private equity group Bain Capital has agreed to buy Indian billionaire Gautam Adani’s entire stake in his so-called shadow bank, as the infrastructure billionaire focuses on core businesses following a bruising short-seller attack.
Bain did not disclose how much it paid for Adani’s 90 per cent stake in Adani Capital and Adani Housing Finance but said it would invest a further $170mn through primary capital and debt to build up the non-bank lender as a “standalone company”.
It is the first time the tycoon has sold his entire stake in a company since US-based short seller Hindenburg Research published a scathing report on Adani’s conglomerate in January, alleging accounting fraud and share price manipulation. Adani denies the allegations.
Six-year-old shadow bank Adani Capital, specialising in loans to small and medium-sized businesses, and home loans provider Adani Housing Finance were previously owned by holding company Adani Finserve Private, according to filings.
Former Macquarie investment banker Gaurav Gupta will continue as chief executive and managing director, retaining his 10 per cent stake in the businesses. He declined to comment on the deal.
Gupta “wanted to become an entrepreneur and I backed him”, Adani said in a statement. “I am very happy that a credible investor like Bain Capital is stepping in now.”
The sprawling business empire of India’s second-richest man — which stretches from coal mining to data centres and TV channels — has been regrouping since the short-seller report wiped about $150bn off the market value of Adani’s listed companies at their lowest point, forcing Adani to cancel a $2.4bn share sale.
To reassure its bankers, the Adani family has sold portions of its holdings in its listed businesses, including electricity and green energy units. The Adani Group said in a statement this month that these sales had helped repay $2.15bn worth of share-backed loans by March and ensured “higher capital availability at the group level”.
Bain Capital is the second high-profile US investor to buy into Adani’s empire following the short-seller attack. Florida-based GQG Partners has invested $3.19bn across four listed Adani companies.
Adani Capital services range from loans for farmers buying tractors to supply-chain financing. It has more than 170 branches across India, according to Bain Capital.
Bain Capital “shares our vision of making affordable finance available to our customer segment”, Gupta said in a statement. With Bain’s capital commitment, “we are now equipped to grow 4x from here”, he added.
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