IDFC First Bank’s board has approved raising up to Rs 7,500 crore through the issuance of preferential shares to affiliate firms of private equity group Warburg Pincus and the Abu Dhabi Investment Authority (ADIA) sovereign wealth fund. Currant Sea Investments BV, an affiliate of Warburg Pincus, will invest Rs 4,876 crore for a 9.8% stake, the bank said in an exchange filing.
Platinum Invictus B 2025 RSC, a wholly-owned subsidiary of ADIA, will invest around Rs 2,624 crore for a 5.1% stake. The fundraising will improve the capital adequacy ratio of the country’s ninth-largest private bank to 18.9% from 16.1% in December 2024.
V Vaidyanathan, MD & CEO, IDFC First Bank, said: “It is great to have Warburg Pincus back and to welcome a wholly owned subsidiary of ADIA as our shareholder. 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.
The deal, however, is subject to shareholder and regulatory approvals.
Over the last six years, bank’s deposits have grown sixfold, loans and advances have doubled, and the CASA ratio has significantly improved from 8.7% to 47.7%. Profit after tax (PAT) surged from a loss of Rs 1,944 crore in FY19 to a profit of Rs 2,957 crore in FY24.
However, the private lender witnessed a decline in net profit in the current fiscal, driven by rising non-performing assets. The lender further said profitability declined in the first nine months of FY25 due to industry-wide challenges in the microfinance sector, which the bank has managed to navigate effectively.
IDFC First Bank had reported a 53% decline in net profit at Rs 339 crore for the third quarter ended December 2024 on increased provisions due to higher slippages of loans.
“We believe the Indian banking sector presents an exciting opportunity and is poised for long-term growth,” Vishal Mahadevia, managing director, head of Asia Private Equity, and global co-head of Financial Services, Warburg Pincus. “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.”
The private lender will issue 1.25 billion preference shares to the investors. The banks’ board has also approved the reclassification of the authorised share capital of the bank. The existing share capital of the bank, comprising 12.96 billion equity shares and 103.8 million preference shares aggregating Rs 14,000 crore, will be reclassified to 12.7 billion equity shares and 1.3 billion preference shares aggregating Rs 14,000 crore.
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. This investment is aimed at supporting the bank’s continued growth, enabling it to meet the rising demand for financial products in the country.”
The lender has raised funds twice recently, mobilising around Rs 3,200 crore in the second quarter of FY25 and Rs 3,000 crore in FY24.