KKR acquires majority stake in Avendus

The firm’s acquisition of Avendus Capital, which owns Avendus PE Investment Advisors, will help scale up the merchant bank and fund its credit solutions business.

KKR and Avendus Capital have signed a definitive agreement under which KKR will acquire a 60 percent stake in the Mumbai-based financial services firm for about $105 million.

KKR’s capital infusion will fund Avendus’ foray into the credit solutions business and grow its wealth and alternative asset management offering to its customers, according to a statement.

KKR will increase its ownership to 70 percent in a year’s time, valuing the firm at about $180 million, according to a source close to the matter.

KKR is making its investment from its Asian Fund II, a 2013-vintage vehicle that closed at $6 billion, according to PEI Research & Analytics.

Asian Fund II recently committed up to $300 million to Emerald Media, which plans to invest in media and entertainment businesses in Asia.

As part of the transaction with Avendus, KKR is purchasing shares from Eastgate Capital, the private equity unit of NCB Capital, a subsidiary of the National Commercial Bank of Saudi Arabia, and Americorp Ventures, an early investor in Avendus.

Further details of the financial terms were not disclosed as the transaction is still subject to regulatory approvals.

Avendus' existing management team, led by co-founders Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal, will continue to manage the platform's day-to-day operations and oversee the growth of the new business lines.

Avendus Capital is an advisory, asset and wealth management firm headquartered in Mumbai with offices in Bangalore and New Delhi.

Its asset management subsidiary, Avendus PE Investment Advisors, manages funds focused on private investment in public equity (PIPE) deals in India. The firm currently manages three funds, according to PEI Research & Analytics.

Fund I is a 2009-vintage vehicle that has returned 60 percent of capital to investors at a net IRR of 14.4 percent, as reported by Private Equity International.

It has fully exited from Fund II in August 2014 and delivered a gross annualised return of 17.8 percent, and returned to its investors 1.5x on the original investment, according to a company press release.

Fund III is targeting INR 5 billion ($92 million, €71 million) and will invest in listed mid-sized companies, as reported by PEI.

In the PE advisory space, Avendus is a leading advisor in the digital and technology sector and has advised more than 35 deals in the past five years, according to a press release on their website.

Key deals in the region include Everstone Capital’s first-ever IT buyout of Servion Global Solutions in 2014; Indian music platform Saavn on its $100 million fundraise led by Tiger Global; logistics company Delhivery on its $85 million deal also led by Tiger Global; and online cab aggregation company TaxiForSure on its $200 million merger with cab service Ola.

Avendus also advised Pepperfry.com, India’s largest managed furniture and home goods e-commerce marketplace, on its $100 million Series D funding from Goldman Sachs, Zodius Capital and existing investors.

It recently advised Blue Star Infotech Limited on the sale of its IT business to Infogain Inc, a ChrysCapital portfolio company.