TVS Credit to make a bid for Avendus Capital
TVS Credit has joined the race for KKR-backed investment bank Avendus Capital as part of its strategy to expand the group’s financial services business, three people with knowledge of the development said.
The financial services arm of the Chennai-based conglomerate has held several rounds of discussions in the last six months ahead of a likely bid, the people cited above said on the condition of anonymity. US private equity firm KKR & Co. has been looking to find a buyer for Avendus Capital for over a year.
TVS Group may acquire Avendus and keep it as a standalone entity within the group, or make an acquisition through TVS Credit, one of the two people cited above said on the condition of anonymity. “The group is well-funded and can pull this off through internal accruals if need be. It does not need to partner with anyone,” the person said. If needed, TVS may raise debt at a later stage.
Others expected to submit binding bids for Avendus include Nomura Holdings, Mizuho Financial Services and US buyout firm Carlyle, previous reports have said. KKR had appointed Nomura to find a buyer over a year ago, but the Japanese investment bank recused itself, given its own interest in Avendus. Later, KKR named Rothschild as investment banker.
Investment journey
KKR first invested nearly $120 million in Avendus Capital in 2015. In 2017, it picked up more shares and brought in private equity firm Gaja Capital, valuing the investment bank at around $869 million on a post-money valuation basis, according to VCCEdge. KKR and Gaja Capital together own around 70% stake in Avendus. Founders and employees, along with private individuals such as former Alliance Tires Group CEO Yogesh Mahansaria own the rest.
The second person said 70% stake in Avendus may be valued at $500-700 million. Queries emailed to KKR, Gaja Capital, TVS, Nomura, Mizuho and Carlyle remained unanswered. Avendus and Rothschild declined to comment.
Avendus’s main business is its investment banking division, led by Gaurav Deepak, who co-founded the firm at 25 along with Ranu Vohra and Kaushal Aggarwal. The firm gained prominence in investment banking when it advised the specially constituted board of Satyam Computer Services on the distress sale of the fraud-hit company in 2009. Avendus partnered with Goldman Sachs in this deal, which saw the Mahindra Group acquiring Satyam.
Avendus developed significant expertise in India’s startup ecosystem, advising many of today’s unicorns during their early to late-stage fundraising efforts. As a result, it holds a substantial market share in India’s technology and startup sectors. In 2022, it expanded its services by entering the equity capital markets business to offer advisory services for initial public offerings.
“The deal size would depend on the stake that is eventually sold to the incoming investor and is likely to be finalized in January,” the second person added.
Control after sale
Avendus CEO Deepak will retain control of the business after the sale, the people cited above said. All three-co-founders are likely to have a say in the choice of buyer.
Final bids for Avendus Capital were due this week. However, according to a third person, the process may enter a definitive negotiation stage only in January given that this is holiday season.
Should TVS Group succeed in its effort, this would help the firm expand its financial services arm.
The Chennai-based group, primarily known for making automotive components and two-wheeler vehicles under TVS Motor Co., is building its financial services arm and has been on an M&A spree. Its financial services interests are led by TVS Credit Services, the captive financing arm of TVS Motor, which has assets under management of around ₹20,000 crore. It sold a 9.7% stake to Premji Invest for ₹737 crore in June this year.
Separately, TVS Holdings Ltd, the holding entity of the group, acquired Home Credit Finance in May 2024.
At the time, the firm’s managing director Sudarshan Venu said, “Financial services represent a huge opportunity for penetration, and digital infrastructure will facilitate India’s consumption and investment story going forward.” The group envisaged growing the TVS Credit and Home Credit Finance loan books from ₹32,000 crore to ₹50,000 crore in three years. TVS Group also established an insurance business through Galaxy Health and Allied Insurance Co. in March.
With Avendus Capital, TVS will own an investment banking business and build an asset management business. Avendus also runs non-bank lender Avendus Finance, which lends to small and medium enterprises. It also has a credit fund through its alternative investment fund (AIF) business and a wealth business for high-networth individuals.
