Warburg pares stake in India’s Capital First

The US-based manager has sold its 25 percent stake in the non-banking financial company to a number of investors, including GIC, Morgan Stanley and HDFC Standard Life Insurance.

Global private equity firm Warburg Pincus has sold its 25 percent shareholding in Indian non-banking financial company Capital First to a group of domestic and foreign investors including Singapore sovereign wealth fund GIC.

With the transaction, GIC now owns an additional 8.93 percent stake in Capital First, bringing its total shareholding to 13.9 percent. Other buyers include Morgan Stanley, HDFC Standard Life Insurance, HDFC Mutual Fund, Nomura, Jupiter India Fund and NatWest Bank.

Warburg sold 25 million equity shares at INR 727.54 per share totalling INR 17.7 billion ($275.4; €245.7 million), according to a filing on the Bombay Stock Exchange.

The firm reportedly made a 5x return for the firm’s investors.

Commenting on the transaction Vishal Mahadevia, co-head and managing director of Warburg Pincus India, said: “It has been a terrific journey, during which Capital First has created immense value for its partners and stakeholders. Affiliates of Warburg Pincus continue to remain significant shareholders in Capital First and we welcome a group of new institutional investors to join us in supporting Vaidya and the management team as the company sets out on its next phase of growth.”

Mumbai-headquartered Capital First, previously known as Future Capital Holdings, provides debt financing to small and medium-sized enterprises in India. The company also offers home loans, two-wheeler loans and consumer durable loans across 40 cities in India.

Warburg first invested an undisclosed sum in Capital First in September 2012 through its affiliate Cloverdell Investment. Since then, Mahavadevia said the firm has transformed and grown the company into one of India’s leading financial institutions specialising in providing financing to micro, small and medium enterprises as well as retail consumers in India.

Warburg will continue to hold a 36 percent stake in the company following the sale.

Warburg Pincus has more than $44 billion in private equity assets under management and has raised 16 private equity funds since 1966.

The firm is in the process of deploying its 2015-vintage global fund, $13.4 billion Warburg Pincus Private Equity XII.

Its current portfolio in India includes multiplex operator PVR Cinemas, advertising platform Quikr, trucking company Rivigo and retailer Kalyan Jewellers.