 "IDFC First Bank gets ₹7,500 crore investment from Warburg Pincus, ADIA")
Private-sector lender IDFC First Bank said on Thursday that US-based private equity firm Warburg Pincus LLC and Abu Dhabi Investment Authority (ADIA) would invest a total of ₹7,500 crore in the bank through a preferential equity issue aimed at supporting the lender’s next phase of growth.
Warburg Pincus, through its affiliate company Currant Sea Investments BV, will invest ₹4,876 crore, while ADIA will invest ₹2,624 crore through its wholly owned subsidiary Platinum Invictus B 2025 RSC, the private lender said in a release.
IDFC First Bank’s board earlier approved the issuance of 1.25 billion fully paid-up compulsorily convertible cumulative preference shares (CCPS), of which 812.69 million CCPS will be allotted to Currant Sea Investments BV at ₹60 each. Similarly, 437.18 million CCPS will be allotted to Platinum Invictus B 2025 RSC at ₹60 each.
Currant Sea Investments BV will hold 9.48 per cent and Platinum Invictus B 2025 RSC 5.1 per cent in the bank on a post-money basis on the conversion of CCPS, the bank said.
According to Capitaline data, this equity fundraise is likely to be the fourth-largest by a private-sector bank in the country. The biggest has been by ICICI Bank (₹15,000 crore) and Axis Bank (₹12,500 crore and ₹10,000 crore).
Further, the bank’s board also approved reclassification of authorised share capital. Accordingly, the existing share capital of the bank, comprising 12.96 billion equity shares and 103.8 million preference shares aggregating ₹14,000 crore, will be reclassified to 12.7 billion equity shares and 1.3 billion preference shares aggregating ₹14,000 crore.
“It is great to have Warburg Pincus back and to welcome a wholly owned subsidiary of ADIA as our shareholder. We thank them both for believing in us and our growth plans and for investing in us even under volatile global situations,” said IDFC First Bank Managing Director & Chief Executive Officer V Vaidyanathan. He added that the bank had firmly moved into profits and was now at a pivotal stage, where its income growth was expected to consistently exceed operating expenditure growth, leading to improved operating leverage. “We expect many businesses which are in the investment stage to turn profitable with scale.”
According to the bank, its branch network, ATM network, and technology need scaling up, and so do its multiple businesses, including credit cards, cash management, and wealth management. Hence the need for growth capital.
The bank is aiming to grow its loan book by 20 per cent for the next few years, which is why such a large fundraise was required. It will increase the capital adequacy of the bank to around 19 per cent from 16.4 per cent currently. “This high capital adequacy will position the bank for strong and profitable growth,” the bank said in its investor presentation.
“We believe the Indian banking sector presents an exciting opportunity and is poised for long-term growth. We are excited to reinvest in the IDFC First Bank team to support them in the next phase of growth and sustainable RoE (return on equity) improvement,” said Vishal Mahadevia, MD, head of Asia private equity, and global co-head of financial services, Warburg Pincus.
Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA, said: “This investment is aimed at supporting the bank’s continued growth, enabling it to meet the rising demand for financial products in the country.”
The private-sector lender has raised funds on two occasions in the recent past. In the second quarter of 2024-25 (Q2FY25), it raised around ₹3,200 crore and in FY24 it raised ₹3,000 crore.
As of December 2024, IDFC First Bank had a loan book of ₹2.31 trillion and a deposit base of ₹2.27 trillion. The bank has a largely retail-focused loan book, with mortgage-backed loans and other retail and consumer loans accounting for 53 per cent of the loan book. Its wholesale book constitutes 18 per cent of the loan book.
Shares of the bank closed at ₹62.98 apiece, down 0.49 per cent from the previous days’ close on the BSE, but higher than ₹55-57 levels seen in early April.
The fine print
> The investment will be through preferential equity issue
> ₹4,876 crore will be invested by Warburg Pincus, through its affiliate company Currant Sea Investments BV > ₹2,624 crore will be put in by ADIA through its wholly owned subsidiary Platinum Invictus B 2025 RSC
> 9.48% will be held by Currant Sea Investments B V
> 5.1% will be held by Platinum Invictus B 2025 RSC