IDFC FIRST Bank bypasses Wall Street to raise $1B from Warburg Pincus, Abu Dhabi Investment Authority
The Mumbai-based lender saved Rs 125 crore in fees with a direct approach to Warburg Pincus and ADIA
IDFC FIRST Bank has raised Rs 7,500 crore ($900 million) from Warburg Pincus and Abu Dhabi Investment Authority's private equity arm, one of the largest private equity investments in an Indian bank.
The transaction, which brings close to $1 billion of foreign capital to India, was structured as a direct deal. "I'm also happy to share that no investment banker was involved in this transaction," said Vaidyanathan V, Managing Director and CEO of IDFC FIRST Bank. "Typically, raising this kind of capital—even through a QIP—would cost the bank Rs 100–125 crore. This was a direct deal, and that's a big save for the Bank."
In a LinkedIn post, he wrote, "I reached out to prospective PE firms, and two of them agreed to go all the way. Every part of the transaction—identifying investors, pitching the story, unit economics, customer experience, franchise quality, mid, long term strategy, risk factors, path to ROA and ROE, strategic positioning, tech readiness & governance—was done directly with select team members from our side. It felt like going back to startup days!"
The investment comes at a crucial juncture for IDFC FIRST Bank, which was formed through the merger of IDFC Bank and Capital First in 2018. Vaidyanathan, who founded Capital First in 2010 after a career at ICICI Bank and Citibank, has been steering the combined entity's transformation.
"We used the first five years for building the basic platform for the bank. Our retail deposits have grown from Rs. 10,400 crore to ~Rs. 2 lakh crore today," he added.
He said the operating profit has grown from Rs 749 crore in FY19 to Rs 6,030 crore in FY24, while the bank moved from a loss of Rs 1,944 crore in FY19 to a profit of Rs 2,957 crore in FY24.
However, Vaidyanathan acknowledged that FY25 has been challenging. "FY25 has been a bad year- PAT is down 44%, but I requested them to look through this in the short run," he said. "We explained MFI is a one-off, and is an industry issue. We're running 24 lines of businesses, some for 15 years, and they are all stable and doing well."
The CEO's pitch to investors focused on the medium-term outlook. "If they look through FY25, then FY26 onwards for many years, we expect to be highly profitable," he told the private equity firms.
Edited by Suman Singh