KKR picks 70% stake in financial adviser Avendus Capital

Besides its core businesses, KKR will help Avendus grow its NBFC business

US private equity firm KKR will invest Rs 700-750 crore to acquire a 70 per cent stake in advisory firm Avendus Capital.

‘‘KKR’s investment and global expertise should help them grow and diversify the platform into a diversified merchant bank with wealth management, lending and alternatives as key areas besides their strong investment banking franchise,”' Sanjay Nayar, Member of KKR and CEO of KKR India, told Business Standard.

Besides growing the investing banking, wealth management and private equity businesses, Avendus’ big focus will be to grow its non-banking financial company (NBFC) business, which will receive Rs 300 crore of capital. ‘‘Some of our fast-growing clients need customised credit solutions like structured debt that are not available through banking channels,” said Ranu Vohra, managing director and CEO, Avendus.

KKR, which is making its investment from its Asian Fund II, will invest in two tranches, said two people close to the deal. In the primary transaction, KKR will invest Rs 450 crore. Nearly Rs 300 crore of this will go in capitalising the NBFC business. In secondary deals, it bought stakes from existing investors Eastgate Capital and Americorp Ventures, an early investor in Avendus, for $35 million or Rs 227 crore. The stake of promoters, who held 42 per cent in the company, will come down to below 25 per cent.

Avendus will also try to grow its $1-billion wealth management business and the mid-market private equity business in joint venture with Zodius Capital. ‘‘With a customer centric approach is how some of the best global merchant banks started and grew into platforms which are scaled, trusted and impactful to their clients,'' said Nayar. Avendus has a strong focus on mid-market companies and the entrepreneurs leading these companies. As these companies grow, they need unique business and financing solutions, and Avendus aims to be the provider of choice for these products and solutions.

Sanjay Nayar, member of KKR and CEO of KKR India, said: “India is witnessing an unprecedented demand for innovative and integrated financial services products as a result of rising entrepreneurship across sectors. Avendus is a world-class firm built and run by three visionary founders, which delivers solutions to meet this demand by offering diverse alternative investment products and wealth advisory services.”

Ranu Vohra, managing director and CEO, Avendus, said: “Having created a platform, which is trusted by entrepreneurs across industries, the mantra now for each of Avendus’ businesses is to ‘scale up’. We have excellent potential to expand our businesses and to become a comprehensive financial services provider to India’s first-generation businesses. KKR’s capital commitment and support will enable us to provide a broader set of synergistic services and products to these clients, which can catalyse their growth. We are very excited about what this partnership means for our clients and colleagues.”