Warburg Pincus and Adia to invest $877m in Indian bank

India’s IDFC First Bank will raise up to 75 billion rupees ($877 million) from affiliate companies of private equity group Warburg Pincus and the Abu Dhabi Investment Authority sovereign wealth fund, the lender said on Thursday.

IDFC First Bank will issue Warburg Pincus, an existing investor, and Adia convertible shares, which, if fully converted, will give them a combined 15 percent stake in the bank.

Currant Sea Investments, a Warburg Pincus affiliate, will invest 48.76 billion rupees for a 9.8 percent stake, while Adia unit Platinum Invictus will invest about 26.24 billion rupees for a 5.10 percent stake, IDFC First said.

The bank will use the investment to fund its growth.

It has a loan book of 2.31 trillion rupees, which it plans to grow at about 20 percent over the coming years, CEO V. Vaidyanathan told CNBC in an interview.

IDFC First Bank’s shares fell by 4.2 percent on the day, before recouping some of their losses to trade 2 percent lower.

The fund raise will increase IDFC First Bank’s book value per share by 2.3 percent and its overall capital adequacy to 18.9 percent from 16.1 percent, it said in a statement.

• Adia’s new office in India to fast-track investments
• Adia-backed Lenskart to raise $1bn from Indian IPO
• Adia to invest $750m in debt of India’s GMR Group

The plan is subject to regulatory and shareholder approvals.

In the October-to-December quarter, the bank reported a 53 percent drop in net profit, as bad loans rose in its microfinance portfolio.