Kedaara Capital and Blackstone have bid for a 20% stake in Axis Bank's NBFC unit, Axis Finance. The company's net profit for FY25 was ₹676 crore and AUM was ₹39,000 crore. Net NPA stood at 0.37% and RoE at 14.5%. The next course of action, whether a stake sale or an IPO, will depend on capital requirements and RBI approval.
Kedaara Capital and Blackstone have bid for approximately a 20% stake in Axis Bank's NBFC unit, Axis Finance. The company's net profit for FY25 increased by 11% to ₹676 crore, and Assets Under Management (AUM) reached ₹39,000 crore. Net NPA was 0.37% and the Capital Adequacy Ratio was 20.9%. The next step, whether a stake sale or an IPO, will depend on the company's capital requirements and RBI approval.
Change in Stake Sale Plan
Previously, Axis Bank had planned to sell a 50% stake in its NBFC unit, Axis Finance, estimated to be worth approximately $800 million to $1 billion. However, this stake has now been reduced to just 20%, or about $350 million to $400 million. Sources indicated that Kedaara Capital and Blackstone have already bid to acquire this 20% stake. Additionally, companies like Advent International, EQT, and Warburg Pincus were also explored for investment.
Business Health of Axis Finance
Axis Finance's business spans several key areas, including corporate loans, real estate funding, collateralized lending, MSME, and retail funding. In FY25, the company's net profit increased by 11% year-on-year, reaching ₹676 crore.
Assets Under Management (AUM) are approximately ₹39,000 crore. Axis Finance accounts for about 38% of Axis Bank's total subsidiary earnings. In FY25, the company's AUM grew at a rate of 22% year-on-year. The loan book recorded a Compound Annual Growth Rate (CAGR) of approximately 31% between FY22 and FY25.
The company's asset quality also remains b. In FY25, its Net NPA Ratio was 0.37% and Capital Adequacy Ratio was 20.9%. Additionally, a Return on Equity (RoE) of 14.5% was recorded during this period. These figures clearly indicate that Axis Finance's financial health is robust and attractive for investment.
IPO Possibility
The path for Axis Finance, whether a stake sale or an IPO, is not yet clear. Axis Bank states that this step will depend on the company's capital requirements and regulatory approval from the RBI. In a recent earnings call, the bank's management indicated that Axis Finance might be classified under the 'Upper Layer NBFC' category.
Upon being classified in this category, the listing of shares becomes mandatory within three years. However, the timeline for this process has not yet been determined. Experts suggest that if Axis Finance is placed in this category, the company's entry into the stock market is probable in the coming years.
Investors' Focus on Axis Finance
The bids from Kedaara Capital and Blackstone to acquire a stake signal that major investors are confident in Axis Finance's growth and business model. The company's diversified lending portfolio and b financial performance have made it attractive to investors.
Furthermore, other private equity firms in the market also appear ready to take a stake in Axis Finance. This indicates that the company's strategic plans and business model are reliable and appealing to investors.
