Bain Capital buys 24.98% stake in IIFL Wealth for nearly Rs 3,700 cr

General Atlantic and billionaire Prem Watsa's company will divest their holdings.

Private equity major Bain Capital has agreed to acquire a 24.98 per cent equity stake in IIFL Wealth Management, India’s largest non-bank wealth manager with assets of $44 billion (Rs 3.3 trillion).

The US-headquartered PE will acquire 22.15 million shares at Rs1,666 apiece for nearly Rs 3,700 crore. Shares of IIFL Wealth closed at Rs 1,671, valuing the company at Rs 14,826 crore.

The stake will be acquired from another PE firm General Atlantic and Prem Watsa-owned FIH Mauritius. The transaction won’t trigger an open offer as it is just below the 25 per cent threshold.

Bain Capital has said the transaction is subject to regulatory and other customary approvals. Sources said the transaction could take a few weeks to complete.

General Atlantic, which had acquired 21 per cent stake in October 2015 for Rs 1,122 crore, stands to make about 3x gain on its investment. Meanwhile, FIH had invested in parent firm IIFL Finance. IIFL Wealth got listed in September 2019 following a scheme of demerge. Fairfax has said it stands to make a profit of $65 million from the deal.

As of December 2021, General Atlantic Singapore held 21 per cent and FIH Mauritius held a 13.64 per cent stake in IIFL Wealth. Fairfax will divest 9.98 per cent stake, while  GA will divest 15.18 per cent, as per a disclosure made by the former.

 

This is the second large deal in India’s private wealth management space in recent months. In August, PE major Blackstone acquired 74 per cent stake in Ask Group—also among the top five non-bank wealth manager— for $1 billion. Other PE investors and wealth management peers too were eyeing the stake in IIFL Wealth, indicating the interest in India’s wealth management growth story. IIFL Wealth operates one of the country's largest alternative investment funds (AIF) and has invested in several Indian startups such as Byju's and Ola.

The investable assets of the rich individuals in the country have increased significantly over the last few years thanks to the boom in the stock market and the startup ecosystem. This has led to an increase in demand for wealth solution providers like IIFL Wealth, which offer tailored-solutions ranging across wealth management, asset management, and estate planning. As per one estimate, the individual wealth in India is projected to grow at an annualized rate of nearly 12 per cent, doubling to Rs 811 trillion by FY25.

“The company is well poised to benefit from secular tailwinds of wealth creation in the economy, greater financialisation, and increasing penetration of formal wealth management. We look forward to working with the team on the next phase of IIFL Wealth’s growth journey,” said Pawan Singh, Managing Director, Bain Capital.

“Bain Capital’s investment is a testament to our strong leadership franchise in the financial services space, and in our team’s ability to continue to execute and grow the business to scale,” added Karan Bhagat, MD & CEO, IIFL Wealth.