Avendus takes big leap with KKR backing

Aims fivefold growth in revenue to Rs 1,400 crore in 5 years

Home-grown financial services firm Avendus Capital, which grew to become a firm with Rs 250-crore annual revenue in about 17 years, has now set a target of Rs 1,400-crore in the next five years. The new growth ambition is fuelled by global PE giant KKR & Co which reportedly invested about $100 million (Rs 660 crore) in Avendus in February to get a 60% stake through infusion of fresh capital (Rs 460 crore) and purchase of stake from some early investors. 

But a five-time growth in five years could be an ambitious target. Avendus is expecting around 60 per cent of its estimated revenue of Rs 250 crore in the current financial year to come from investment banking business. The rest will come from wealth management and alternate assets management businesses. These are primarily the advisory businesses that are not expected to achieve a five-time growth in the next five years in the domestic market.

Ranu Vohra, managing director and CEO for Avendus, is banking largely on its newly launched non-banking finance company (NBFC) which has been capitalised with a part of the money KKR invested. “In M&A and PE advisory we have market leadership and it continues to grow in a steady manner. NBFC, wealth management and alternate asset management are the businesses that will help us scale in non-linear manner,” says Vohra. 

He expects only a third of the revenue to come from M&A and the PE advisory business in the next five years. Of course, on a much larger revenue. The other three businesses are expected to contribute two thirds of this estimated Rs 1,400-crore revenue. This will include one-third from the NBFC, about 30 per cent from wealth management and the rest from alternate asset management.

 

“With KKR, directionally what we are looking at is scale,” says Vohra. “Every business needs to have a certain scale to attract the right talent. KKR has increasingly helped us sharpen our focus on such products and offerings which can provide us scale,” he says.

Avendus has expanded its team by 50 per cent to 194 employees now from 130 people before KKR invested. A large number of this new team is top management recruits from marquee banks. This includes hiring stock markets veteran Andrew Holland and his team from Ambit for the alternate asset management business. Holland had earlier spent a long stint with DSP Merrill Lynch. For M&A advisory it hired Chintan Kothari from Citibank to build healthcare practice at Avendus. Other key hires include Swati Singh from IIFL to head fixed income for the wealth management business. And to head the NBFC business it hired Sandeep Thapliyal from RBL Bank.

While Avendus charts its new growth plan it will face challenges to get right recognition among the customers. The firm first came to limelight when it was selected as investment banker along with bulge bracket Goldman Sachs for sale of troubled IT major Satyam Computer. It also became the top-earning investment bank in 2015 in domestic markets by advising digital start-ups to raise capital.