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Bain checks the time on India’s banking ball

Indian banks are enjoying themselves, and one foreign buyout king who made sure a $32 billion lender attended the party is cutting back on the dancing.

Bain Capital made $400 million on Tuesday from the sale of slightly under a third of the almost 4% stake it acquired in Axis Bank (AXBK.NS) in 2017. Back then, while the third-largest non-state-controlled lender in the nation was struggling with a huge number of subprime loans, the private equity firm and Life Insurance Corporation of India (LIFI.NS) infused cash.

Amitabh Chaudhry, who took over as CEO in 2019, an ex-executive from HDFC Life Insurance, has given Axis a newfound sense of assurance. Less than half as much as before Bain entered the market, gross bad loans make up 2.5% of all assets.

In the most recent quarter, annualised return on equity reached 18.9%, up from less than 3% in March 2020, supporting a valuation of 1.9 times projected book. For $1.6 billion, the bank purchased Citi’s (C.N) ‘Indian retail business’ in March.

It’s likely that more funding will be needed to pay for that purchase. In addition, the bank’s stock has increased 25% this year while falling by roughly the same amount for overseas competitors US Bancorp and Barclays (BARC.L) It’s a good time to send some members of Bain’s party home because the company currently has 1.6 times its money, excluding dividends.


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