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MUMBAI : Homegrown financial services group Avendus Capital Pvt. Ltd is up for sale, with private equity firm KKR & Co. planning to exit the company at a valuation of $500-600 million, two people aware of the matter said.

The sale, if concluded, would be one of the largest exits by KKR from an Indian financial services company. Besides KKR, a handful of other investors may also sell their stake in Avendus, the people said, requesting anonymity.

Spokespeople for Avendus and KKR declined to comment.

KKR is the largest shareholder in Avendus, with around 60% stake.

KKR has been active in India since 2008 and recently completed a  <span class='webrupee'>₹</span>9,000 crore exit from Max Healthcare—its largest ever in India. Photo: Reuters
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KKR has been active in India since 2008 and recently completed a 9,000 crore exit from Max Healthcare—its largest ever in India. Photo: Reuters

Avendus offers asset management, credit solutions, investment banking and wealth management services.

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“Including KKR’s stake, a total of around 75% stake of Avendus may be sold to new potential buyers, who could come in as new owners of Avendus," one of the two people said.

Nomura has been given the mandate to shortlist bidders for Avendus, the two people said.

Spokesperson for Nomura declined to comment.

“KKR wants Avendus to go into stronger hands where the financial services firm can flourish and grow bigger. KKR and Avendus are both bullish on the India story, and there is a significant opportunity waiting for Avendus’ investment banking, wealth and asset management business," the first person said.

There are not too many buyers for a business as big as Avendus’.

The prominent domestic ones include ICICI Securities, HDFC Securities, Axis Securities and Investcorp. However, it could not be immediately ascertained if they were interested.

KKR had acquired a majority stake in Avendus Group from existing investors in November 2015, paying $115-120 million ( 750-780 crore then) when Avendus was at its peak, ranking among the top investment banks in India.

KKR bought about 58% from 13 investors led by Eastgate Capital Group (ECG), which alone held about a 26% stake in Avendus.

The remaining 42% was held by founders Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal.

ECG, the private equity unit of NCB Capital, the investment banking arm of the National Commercial Bank of Saudi Arabia, had invested 100 crore in Avendus in 2008.

KKR announced the purchase of a majority stake in Avendus in 2015 and had agreed to invest more money in 2017, according to the company’s website.

Earlier this year, Avendus’ CEO Gaurav Deepak announced the acquisition of the institutional equities business of Spark Capital to offer equity capital market services.

“KKR is into creating returns for investors. It has sharpened the business for Avendus and helped the leaders of the company shape their strategies to grow the business of investment banking and wealth management. Today, Avendus is in a different league and has positioned itself as a firm that HNIs (high networth individuals) and issuers of capital would look up to. So this is the right time for the business to be taken over by a strong parent that can provide Avendus with the scale. Avendus has arrived at the second stage of growth, where it can compete globally. Therefore, this acts as an appropriate time for KKR and other investors to monetize their stakes at the best possible price. If one looks carefully at the recent stake sale deals by KKR, a similar growth story can be found," said the first person.

KKR has been active in India since 2008. Recently, it completed a 9,000 crore exit from Max Healthcare—its largest ever in India.

Among recent deals, Avendus and Spark advised Biocon Ltd in its $153 million worth stake sale in Syngene International Ltd; closed TPG Rise Fund’s stake sale of 6.7% in Dodla Dairy; advised Warburg Pincus on its $54 million stake sale in CAMS; acted as lead manager for AU Small Finance Bank’s 2,000 crore qualified institutional placement; advised Niyo on its $30 million fundraising from Multiples Alternate Asset Management; advised Innoviti on a $45 million fund raise; and advised Shiprocket on its $200 million acquisition of Picker.

(This story has been updated to remove a reference to Citigroup being given the mandate, along with Nomura, to shortlist bidders for Avendus.)

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ABOUT THE AUTHOR

Anirudh Laskar

Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.
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