Singapore’s GIC hikes stake in Capital First as Warburg cuts holding

Visual from the company's website

Private equity firm Warburg Pincus has reduced its stake in Capital First Ltd. by selling a little more than 2 crore shares, a spokesperson for the non-banking financial services company confirmed to BloombergQuint.

Cloverdell Investment Ltd., an affiliate of Warburg Pincus, sold a 25 percent stake to marquee investors, the company’s media statement later said. Warburg Pincus still remains the promoter with a 36 percent holding.

GIC, a sovereign wealth fund established by the Government of Singapore, took the opportunity to increase its shareholding in Capital First to 13.9 percent from 5 percent earlier.

“Apart from being a large $100-billion fund, GIC is also a sovereign wealth fund – so the investment is open-ended and doesn’t have a fixed life. So there will be no pressure to exit,” V Vaidyanathan, Executive Chairman, Capital First Ltd.

Among the other investors that acquired stake from Warburg include Natwest Bank Plc, HDFC Mutual Fund, HDFC Life Insurance and Morgan Stanley.

V Vaidyanathan, the executive chairman of Capital First, said in a phone interview, “As a result of this transaction, the investment by foreign portfolio investors and domestic institutions has increased from 19 percent to over around 37 percent. The stock of the company has thus become far more diversified now.”

Warburg had acquired around a 61 percent stake in Capital First through multiple rounds from 2012 to the first three months of 2014. The total investment stands at around Rs 1,038 crore, according to BloombergQuint’s calculations.

Warburg Pincus had acquired its shares in Capital First at an average cost of Rs 162 per share. The PE firm sold more than a third of its stake at an average price of around Rs 730 per share on Wednesday.

“The real story of Capital First is yet to play out in the next five to seven years. And I am sure Warburg wants to enjoy that journey as well. Am sure the new investors will enjoy the next phase of growth which will be very exciting,” V Vaidyanathan, Executive Chairman, Capital First Ltd.

Vaidyanathan had told BloombergQuint in a recent interview that while he hoped that the private equity firm stays invested for a longer time, he would not be too worried if the promoter sold its stake in the company.

Capital First’s market capitalisation has risen nearly nine-fold to Rs 7,108 crore since March 31, 2012. The stock closed 4.6 percent lower compared to the benchmark Nifty 50 Index that ended flat on Wednesday.

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Bloomberg