Marquee global growth equity firm Warburg Pincus and Indian mid-market private equity firm Faering Capital have joined hands to back a financial services company, a little over five years after co-investing in a fashion apparel maker
Warburg Pincus has increased its stake in Computer Age Management Services Pvt. Ltd (CAMS) while Faering Capital came as a new shareholder recently, two people familiar with the development told VCCircle.
Warburg had picked up a stake of around 12.6% in CAMS from mortgage lender HDFC and the National Stock Exchange (NSE) for Rs 420 crore ($60 million) last year. Separately, HDFC Bank was supposed to sell an undisclosed quantum of stake to Warburg as part of the deal.
It could not be immediately ascertained if HDFC Bank did indeed monetise its investment in CAMS, which acts as a registrar and transfer agent (RTA) for large asset managers in India. An email sent to HDFC Bank went unanswered.
In the latest transaction, Warburg and Faering have picked up an 8% to 10% stake in CAMS from its promoter group ACSYS Investments Pvt. Ltd, one of the people said, requesting anonymity. The deal value is pegged around Rs 330-400 crore ($47-57 million). Bulk of this came from Warburg, it is understood. Faering Capital typically strikes deals in the $5-10 million range, according to VCCEdge, the data research platform of Mosaic Digital.
Warburg’s exposure to CAMS is now believed to be around $100 million. It declined to comment on the development while Faering Capital confirmed its investment.
“CAMS is a market leader in the mutual fund registrar and transfer agent (RTA) industry and will continue to participate in the substantial growth of the mutual fund industry in the years ahead,” said Sameer Shroff, co-founder and managing director at Faering.
Email queries to CAMS and Acsys Investments did not elicit any response till the time of publishing this article.
In December 2017, HDFC had first disclosed that it was selling a stake in CAMS to Warburg Pincus and added that group firm HDFC Bank would also sell some stake. At the time, HDFC and HDFC Bank held 11% and 6% respectively while NSE held 45% and ACSYS owned around 31% stake in CAMS.
In March 2018, HDFC clarified that it had decided to sell a smaller stake. NSE Strategic Investment Corporation Ltd, a wholly owned subsidiary of NSE, also decided to sell 7.5% instead of the 10% as originally envisaged.
With the latest deal, Warburg’s holding is believed to have moved to around 20%. Acsys will hold a 21.83% stake in CAMS.
Warburg has invested in several Indian financial services companies such as AU Small Finance Bank, Capital First, HDFC and Kotak Mahindra Bank. In July 2017, it picked up a stake in ICICI Lombard General Insurance for $282.71 million; it sold a part of its shares in 2018.
The PE firm invests in the country out of its global fund Warburg Pincus Private Equity XII LP. Its latest flagship fund is Warburg Pincus Global Growth LP, which mobilised $13.75 billion when it hit its first close late last year.
Warburg Pincus has more than $44 billion in private equity assets under management. Founded in 1966, the New York-based firm has raised 17 private equity funds which have invested more than $60 billion in over 800 companies in more than 40 countries.
It had previously teamed up with Faering to invest in apparel company Biba.
Faering Capital, CAMS
The PE firm is led by Aditya Parekh, the elder son of HDFC chairman Deepak Parekh, and Sameer Shroff.
This is Faering Capital’s fourth transaction in the financial services sector from its latest fund.
In March 2019, it invested in SME-focussed non-bank finance firm Finnova Capital. In December 2018, it invested in auto financier WheelsEMI Pvt. Ltd. It had earlier invested in Utkarsh Micro Finance.
CAMS is a transfer agent and provides registry services to mutual funds. It has also tied up with insurance companies, private equity funds and financial services firms to offer them technology-enabled services.
For the financial year that ended on March 2018, CAMS reported revenue of Rs 650.6 crore and a net profit of Rs 159.9 crore. In comparison, its revenue for March 2017 was Rs 472.8 crore with a net profit of about Rs 107.5 crore.
