MC EXCLUSIVE Blackstone in talks for 15% stake in IIFL Finance for a $500-600 million deal; Advent also in fray
Discussions with both private equity investors are ongoing, with a conclusion expected later today. IIFL Finance's board is scheduled to meet on Tuesday (November 10) to consider the proposed fundraise.
Blackstone leads Advent in the race for a 15% IIFL Finance stake as the NBFC weighs a $500-600 million capital raise at its November 10 board meeting.
Blackstone in the lead to acquire 15% stake in IIFL Finance.
Deal involves USD 500-600 million primary equity infusion, including infusion from IIFL's promoters.
IIFL board to meet soon to finalize the PE investment.
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Blackstone is said to be in the lead to acquire a 15% stake in IIFL Finance through a proposed USD 500-600 million equity investment, even as rival private equity investor Advent International has also expressed interest in the non-banking financial company (NBFC), people familiar with the development said.
According to multiple people aware of the negotiations, conversations with both the global PE majors, which started in September this year, picked up momentum in recent weeks. The deal talks have now reached the final stages, said the people cited.While the transaction will not entitle the incoming investor to a board seat, the people in the know say final detailing on valuations is under way. “Whoever offers a better deal overall will emerge successful,” said a banker who didn’t want to be named. “Clarity will emerge when the US opens for business later today,” he added. IIFL Finance’s board is set to meet tomorrow (November 10) to discuss the equity raise.“The deal is likely to be announced post the board meeting which is expected to consider bids from the two PE firms,” said another source who didn’t want to be named.
Emails sent to IIFL Finance, Blackstone and Advent International remained unanswered till publishing the article.
Deal contours
In what is likely to be the largest transaction in India’s NBFC space this year, the deal is expected to involve an equity infusion of between USD 500 – 600 million.
The fundraise may see promoters of IIFL Finance, namely Nirmal Jain and R Venkatraman infusing USD 100 million on a combined basis to keep their present stake, slightly above 24 percent intact in the lender. Promoters' equity infusion will form part of the primary capital raise sized at USD 500 - 600 million. Also, the proposed transaction is expected to be entirely a primary capital infusion, with no secondary share sale. This implies that Fairfax Financial Holdings, which currently owns 13.64 percent in IIFL Finance, may not exit its investment in this transaction, said the sources cited.
“What Fairfax does with its stake is independent of this deal,” said a banker.
The proposed investment would bring significant fresh capital into IIFL Finance and provide a boost to its growth plans, particularly in its retail lending businesses. IIFL Finance’s capital position is expected to increase to 30 percent post the fund infusion, with Tier-1 capital at 25 percent.
For Blackstone, after picking up 9.99 percent in Federal Bank last year, the deal, if it goes through, would be its significant investment in India's NBFC space. Same would be the case with Advent as well, which continues to hold about 8.5 percent stake in Yes Bank, while being a prominent investor in Svatantra Microfin, an IPO bound leading microfinance lender promoted by Ananya Birla.
IIFL Finance's financial performance
The proposed capital raise comes at a time when IIFL Finance has reported an improvement in its financial performance, with growth in its loan book and better asset quality. For Q2 FY27, IIFL Finance reported consolidated assets under management (AUM) of Rs 1.24 lakh crore, registering a 38 percent year-on-year increase. Its net revenue stood at Rs 2,340 crore, while profit after tax (PAT) rose 93 percent year-on-year to Rs 805 crore.
The company's gross non-performing assets (GNPA) ratio improved to 1.5% as of September 2026, compared with 2.1% a year ago.
IIFL Finance has also been shifting its portfolio towards secured lending, with nearly 90% of its AUM now comprising of secured loans, namely gold loans and home loans and loans to micro, small and medium enterprises forming its key businesses.
IIFL Finance reported a consolidated capital adequacy ratio of 23.5 percent at the end of September 2026. Its return on equity for the first half of FY27 stood at an annualised 20.1 percent. The deal is likely to help the lender in a rating upgrade. The company currently has a AA rating.
Hamsini Karthik Number crunching, drawing interesting inferences (sometimes contrarian), and penning them in an impactful manner, best describes what I do. As a BFSI specialist, I enjoy telling stories about what’s working and what not for lenders, breaking down regulatory jargon and how they affect customers and financiers, and simplifying the economics of money. When not glued to banks, the world of autos and airlines keeps me busy.
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