Indian banking sector presents exciting opportunity, says Mahadevia
The Board of Directors of IDFC FIRST Bank, at its meeting held 17 April, has approved a preferential issue of equity capital (CCPS) amounting to approximately Rs.4,876 crore to Currant Sea Investments B.V., an affiliate company of global growth investor Warburg Pincus LLC and approximately RS.2,624 crore to Platinum Invictus B 2025 RSC Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) managed by its Private Equities Department.
The proposed issues are subject to shareholder and regulatory approvals.
Over the last six years, IDFC FIRST Bank has undergone a successful transformation from its legacy as an infrastructure-focused Development Finance Institution (DFI) to becoming a modern, technology-driven, pan-India, universal bank. In the process, it has made significant investments in distribution, technology, and talent to become a leading private sector bank in India https://www.nseindia.com/.
During this time, deposits grew 6x, loans and advances doubled, and CASA ratio has significantly improved from 8.7% to 47.7%. PAT rose from a loss of Rs.1,944 crore in FY19 to a profit of Rs.2,957 crore in FY24. However, profitability dipped in 9M FY25 due to industry wide challenges in microfinance, which the bank has navigated well. With this fund raise, the overall capital adequacy will increase from 16.1% to 18.9%, (CET-1 ratio at ~16.5%, calculated on the capital position of the Bank as of December 31, 2024), strengthening the Bank’s balance sheet and positioning it for strong and self-sustaining profitable growth https://sbi.com.in/.
IDFC FIRST Bank Managing Director & CEO V Vaidyanathan said, “From day one, we have always built our foundation of the Bank with a long-term vision of building a world class bank in India. We are building a culture of empathy for customers and strive to offer highest levels of customer service. We are technologically advanced and continue to stay cutting-edge https://www.bseindia.com/.”
“The Bank has firmly moved into profits and is now at a pivotal stage, where our income growth is expected to consistently exceed OPEX growth, leading to improved operating leverage. We expect many businesses which are in the investment stage to turn profitable with scale.
“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 future growth plans and for investing in us even under volatile global situations. We believe only by building a strong, respected franchise loved by customers and supported by strong unit economics, we will deliver sustainable long-term returns to our stakeholders.”
Vishal Mahadevia, Managing Director, Head of Asia Private Equity, and Global Co-Head of Financial Services, Warburg Pincus, added, “We believe the Indian banking sector presents an exciting opportunity and is poised for long-term growth. At Warburg Pincus, we have a long track record of partnering with exceptional teams. We have known the IDFC First Bank team for over a decade dating back to their early days and have closely seen the build out of the bank. We are excited to re-invest behind the IDFC First Bank team to support them in the next phase of growth and sustainable ROE improvement.”
Hamad Shahwan AlDhaheri, Executive Director of the Private Equities Department at ADIA, said, “IDFC First Bank has firmly established itself as one of India’s leading private sector banks, backed by a seasoned management team. It has expanded both its technology and branch infrastructure over number of years and is well positioned for the future. This investment is aimed at supporting the bank’s continued growth, enabling it to meet the rising demand for financial products in the country.”
IDFC FIRST Bank is a new-age private bank in India, with a vision to create a world class bank in India, focused on Ethical, Digital, and Social Good Banking. It operates 971 branches spread over 60,000 locations including cities, towns, and villages across India. While it has a physical network, it is built as a digital first Bank in approach, scale and scope.
Warburg Pincus LLC is the pioneer of private equity global growth investing. A private partnership since 1966, the firm has the flexibility and experience to focus on helping investors and management teams achieve enduring success across market cycles. Today, the firm has more than US$87 billion in assets under management, and more than 220 companies in their active portfolio, diversified across stages, sectors, and geographies. Warburg Pincus has invested in more than 1,000 companies across its private equity, real estate, and capital solutions strategies https://www.commerce.gov.in/.
The firm is headquartered in New York with offices in Amsterdam, Beijing, Berlin, Hong Kong, Houston, London, Luxembourg, Mumbai, Mauritius, San Francisco, São Paulo, Shanghai, and Singapore. For more information, please visit www.warburgpincus.com.
Established in 1976, the Abu Dhabi Investment Authority (ADIA) is a globally diversified investment institution that prudently invests funds on behalf of the Government of Abu Dhabi through a strategy focused on long-term value creation. Fiinews.com
