Based on Monday’s closing price of  ₹41.1 per share, the Warburg stake is worth around  ₹1,940 crore (Photo: Twitter@CapitalFirstLtd)
Based on Monday’s closing price of 41.1 per share, the Warburg stake is worth around 1,940 crore (Photo: Twitter@CapitalFirstLtd)

Warburg Pincus pledges entire stake in IDFC First Bank to raise funds

  • Warburg holds 471.73 million shares in IDFC First Bank through an entity called Cloverdell Investment Ltd
  • Warburg has mobilized around $150 million by pledging the entire IDFC First stake, said a person aware of the development

Mumbai: Global private equity major Warburg Pincus has pledged its entire 9.86% shareholding in private lender IDFC First Bank Ltd to raise funds, two people aware of the development said, requesting anonymity.

Warburg holds 471.73 million shares in IDFC First Bank through an entity called Cloverdell Investment Ltd. Based on Monday’s closing price of 41.1 per share, the Warburg stake is worth around 1,940 crore.

Warburg pledged the shares with Citigroup, Barclays and Standard Chartered to raise funds, said the first person.

“The funds mobilized by Warburg through the loans will be used to return capital to limited partners (LPs, investor in a private equity fund) of the funds managed by Warburg. PE firms generally do this to provide liquidity to LPs in a fund which is nearing its life, as well as for other reasons," he added.

According to the second person, Warburg has mobilized around $150 million by pledging the entire IDFC First stake.

Warburg Pincus, Barclays, Standard Chartered and Citi declined comment to Mint’s queries.

In 2012, Warbug had acquired a 42.73% stake in Capital First (before the merger with IDFC Bank), formerly Future Capital Holdings Ltd, from Pantaloons Fashion and Retail Ltd.

Subsequently, in October that year, it had bought an additional 24.43% stake through an open offer.

In May 2017, Warburg sold a 25% stake in Capital First through an open market transaction to several global and domestic investors, including Singapore’s sovereign wealth fund GIC Pte. Ltd.

In December 2018, IDFC Bank and Capital First merged to form a combined entity with assets of 88,000 crore under management and a distribution network of 194 branches.

As on 30 June, the bank had total assets of 1.12 trillion under management with retail loans comprising 40% of the asset base.

The bank’s gross non-performing assets (NPA) stood at 2.66%, while capital adequacy ratio was at 14%.

It had 279 branches as on 30 June.

India has been a major investment destination for Warburg—one of the earliest global PE firms to invest in the country. In recent times, it has made several large investments across insurance, microfinance, logistics, education financing and real estate.

In March, Warburg Pincus had announced the acquisition of an 80% stake in education financing company Avanse Financial Services Ltd from Wadhawan Global Capital group.

Warburg’s other recent investments in India include leading a $65 million round in logistics startup Rivigo, a $200 million commitment to set up a shopping mall platform with realtor Runwal Group and a plan to jointly invest 3,000 crore with Lemon Tree Hotels to develop student housing and co-living spaces.

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