Warburg Pincus sells its 25% stake in Capital First

Warburg Pincus affiliate Cloverdell Investment sold the 25% stake in Capital First Singapore’s sovereign wealth fund GIC, others, for an undisclosed amount


Capital First provides debt financing to MSMEs and consumer as well as small-ticket loans in unbanked and under-penetrated segments. Photo: iStock
Capital First provides debt financing to MSMEs and consumer as well as small-ticket loans in unbanked and under-penetrated segments. Photo: iStock

Mumbai: Private equity firm Warburg Pincus LLC part-exited Capital First Ltd by selling a 25% stake in the non-banking financial company (NBFC) through open market transactions on Wednesday, according to a stock exchange filing.

Cloverdell Investment Ltd, an affiliate of Warburg Pincus, sold the stake to marquee global and domestic investors, including Singapore’s sovereign wealth fund GIC Pte. Ltd.

The company, founded by V. Vaidyanathan, did not disclose the deal value and the names of the other investors.

With the dilution, Warburg now holds a stake of about 36% stake in Capital First.

“Affiliates of Warburg Pincus continue to remain significant shareholders in Capital First and we welcome a group of new institutional investors to join us in supporting Vaidya ( the founder) and the management team as the company sets out on its next phase of growth,” said Vishal Mahadevia, co-head and managing director, Warburg Pincus India.

As part of the transaction, GIC bought a 8.93% stake in Capital First, taking its total shareholding to 13.91%. GIC, through its affiliate Caladium Investment Pvt. Ltd, had invested Rs340 crore in the NBFC in November last year.

Warbug acquired a 42.73% stake in Capital First, formerly known as Future Capital Holdings Ltd, from Pantaloons Fashion and Retail Ltd in 2012 and, subsequently, an additional 24.43% stake through an open offer in October that year. As of March 31, the PE firm held a 61.06% stake in the NBFC through two of its affiliates—Dayside Investment Ltd and Cloverdell Investment Ltd.

On Wednesday, shares of Capital First closed at Rs723.95 a share, down 5.12%, after touching an intraday high of Rs749 and an intraday low of Rs713.40.

Capital First focuses on micro, small and medium enterprises (MSMEs) and consumer financing. It offers loans for buying homes, two-wheelers and consumer durables, as well as loans against property, to entry and mid-level salaried employees of corporate entities and to self-employed individuals.

It has three main businesses—Capital First Commodities Ltd, Capital First Home Finance Ltd and Capital First Securities Ltd. At the end of FY16, CFL had assets under management (AUM) of Rs16,103 crore.

With more than $44 billion in AUM, Warburg has invested more than $60 billion in over 780 companies across more than 40 countries so far.

In the financial services space in India, apart from Capital First, the PE firm also invested in AU Financers (India) Ltd in 2012. In February, AU Financiers filed a share sale prospectus with capital market regulator Securities and Exchange Board of India for an initial public offering (IPO) in which Warbug Pincus will sell a part of its stake.

Its other portfolio companies include Diligent Power Pvt Ltd, Ecom Express Pvt. Ltd, Laurus Labs Ltd, Lemon Tree Hotels Ltd and Piramal Realty Pvt. Ltd.

Earlier this month, Mint reported that hotel chain Lemon Tree Hotels Ltd, another Warburg Pincus-backed firm, has shortlisted investment banks to lead its IPO efforts.

With progress on the Lemon Tree IPO, Warburg will inch closer to creating much needed liquidity for its legacy India portfolio where the American PE fund has invested $460 million across six assets in the infra and energy sectors.

Last month, the PE firm agreed to buy a 10% stake in fin-tech startup Sienna Systems Resources Pvt. Ltd, which builds and manages programmes based on digital payments, such as for loan distribution and financial exchange, insurance and investing, among others.

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