General Atlantic to buy 21.6% in IIFL Wealth for $173M

Global private equity firm General Atlantic has inked its biggest India related deal in 11 years to buy a stake in wealth management unit of IIFL Holdings Ltd (formerly India Infoline).

The PE firm will buy 21.61 per cent stake in IIFL Wealth Management for Rs 1,122.34 crore ($173 million), as per a disclosure during the weekend.

IIFL Wealth will allot 1.7 million equity shares at a price of Rs 586.70 each aggregating to Rs 100 crore besides 13.63 million warrants at the same price worth Rs 863 crore to the PE firm. In addition, General Atlantic will buy shares worth Rs 159.34 crore from the firm's employees.

Upon full conversion of warrants into equity it will pick 21.61 per cent stake, valuing the firm at Rs 5,193 crore ($800 million).

For General Atlantic, this is the biggest India related investment since 2004 when it invested in BPO firm Genpact.

“As the market opportunity for wealth management in India grows, we believe the company is well-positioned to continue its leadership position as the platform of choice for Indian investors,” said Sandeep Naik, managing director and head of India for General Atlantic.

The marquee PE firm has been investing in one Indian company a year for the last few years. In 2004 it invested in Citius IT Solutions Pvt Ltd.

IIFL Wealth that also houses the alternative investment funds business of the group, said it will utilise the Rs 963 crore it would get through primary issuance of shares for the continued growth and platform expansion.

As on September 30, IIFL owned 76.79 per cent stake in IIFL Wealth. The unit was launched in 2008 along with top executives Karan Bhagat, Yatin Shah and Amit Shah. The company creates wealth management solutions for high net-worth investors. It claims to be currently managing $12 billion of assets for over 8,600 clients through its over 150 relationship managers.

The firm was largely known for wealth management solutions besides it realty PE funds and hedge funds but it has been slowly pushing up the alternative investment practice. In August, it said it is looking to raise Rs 1,000 crore to invest in startups and venture capital funds.

Last year, it had also acquired small home-grown PE firms India Alternatives and had recently named former head for Asia at private equity firm 3i Group, Anil Ahuja, as its chief investment officer for the offshore fund management unit.

Headquartered in Mumbai, the company has 14 domestic offices in Mumbai, Ahmedabad, Bangalore, Baroda, Chandigarh, Chennai, Goa, Hyderabad, Jaipur, Kanpur, Kolkata, Ludhiana, New Delhi, and Pune and a presence through its subsidiaries in global financial hubs.

“As a leading investor with deep expertise in financial services and wealth management, General Atlantic is well-aligned with our mission and will help to take IIFL Wealth to the next level through expanded products and services,” said Nirmal Jain, founder and chairman, IIFL Holdings.

IIFL Holdings also has a number of prominent foreign investors on board including Carlyle and Canadian billionaire Prem Watsa's Fairfax. In July this year, Fairfax India Holdings announced its intention to launch an open offer to buy 26 per cent stake in IIFL Holdings Ltd. The open offer is to open this week.

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