Private equity giants circle Axis Finance in potential $1 billion deal

Global and domestic private equity firms including Blackstone, Kedaara Capital, Advent International, and Warburg Pincus are in talks to acquire a 40–100% stake in Axis Finance, the non-banking financial arm of Axis Group, three people with direct knowledge of the matter said. The deal, currently in the due diligence stage, could see binding offers by the end of September, they added.

“Firms are doing their diligence. The deal contours will be decided post that,” one of the people cited above said.

“The firms are likely to value the company anywhere between $800 million–$1 billion,” another person said.

Axis Bank, India’s third largest private lender, has initiated the sale process as it seeks to comply with proposed Reserve Bank of India (RBI) regulations that require scheduled commercial banks to reduce their stake in subsidiaries, including non-banking financial companies (NBFCs), to 20% or less within two years. Another RBI proposal restricts group entities within a bank from engaging in overlapping lending businesses.

In the past, the group has explored various options to comply with RBI’s norms including an initial public offering (IPO) or a reverse merger with the main bank, all of which were difficult to execute. “The group has decided to sell the firm for now. Morgan Stanley is helping it with the process,” the third person cited above said.

Emails sent to Axis Bank and Morgan Stanley went unanswered. Spokespersons for Blackstone and Kedaara declined to comment. Warburg Pincus and Advent also declined to comment.

The potential sale of Axis Finance comes amid growing private equity interest in lending businesses, particularly in light of RBI’s push to reduce concentration risks. Last year, HDFC Group sold its education loan arm HDFC Credila to EQT and ChrysCapital for $1.15 billion, while TPG acquired Poonawalla Housing Finance in a ₹3,900 crore deal.

Axis Finance Ltd, a wholly owned subsidiary of Axis Bank, operates a diversified lending book that spans corporate loans, real estate funding, collateralised lending, emerging corporate lending and retail loans. Under retail, it offers loan against property, business loans, salaried personal loans, and housing loans, leveraging Axis Bank’s branch network in Tier I and II cities.

According to a February 2025 rating release by Brickwork, Axis Finance’s assets under management stood at ₹36,962 crore as of 31 December 2024. The lending book comprised 47% retail, 44% wholesale, 6% MSME and 3% treasury assets. The company reported a capital adequacy ratio (CRAR) of 21.22% as of 31 December 2024, up from 19.11% as of 31 March 2024.

Its gross non-performing assets (GNPA) ratio was 0.65% and net NPAs 0.33% as of December 2024, compared with 0.46% and 0.24% respectively in March 2024. The provision coverage ratio stood at 48.27% in December, up from 47.90% nine months earlier.

For the nine months ended 31 December 2024, AFL posted ₹3,014 crore in revenue, nearly matching its full-year FY24 revenue of ₹3,154 crore. Profit after tax was ₹494 crore for the nine-month period, compared with ₹597 crore in FY24.