Exclusive | Blackstone eyes up to 20% stake in IIFL Finance, sources say

Blackstone is looking to acquire up to a 20% stake in IIFL Finance, potentially marking a significant change in the ownership of the non-bank lender, sources told CNBC-TV18 on September 07.

Sources said Blackstone may acquire Fairfax’s entire stake in IIFL Finance. Fairfax currently owns around 13% of the company, although around 2% of that holding was picked up by a global foreign institutional investor during the current quarter.

Blackstone may also look to acquire an additional 7–10% stake in IIFL Finance through a preferential issue, taking its potential holding to as much as 20%, sources said.

IIFL Finance and Fairfax may also be in discussions with other private equity investors for a stake sale, sources added.

IIFL Finance, when contacted by CNBC-TV18, declined to comment on the matter, saying: “We refuse to comment on market speculation.”

Shares of IIFL Finance were trading at ₹646.05 on the NSE at 2:50 pm on Monday, down 0.78% from the previous close.

The potential stake transaction comes after a strong first quarter for IIFL Finance. The non-bank lender

reported a 189.3% year-on-year rise in consolidated net profit to ₹675.1 crore for the quarter ended June, compared with ₹233.4 crore a year earlier.

Net interest income rose 54.8% year-on-year to ₹2,003.9 crore, while provisions declined to ₹294.2 crore from ₹512.5 crore. On a pre-non-controlling interest basis, profit after tax stood at ₹713.1 crore, up 160% year-on-year and 14% sequentially.

Total income increased 34% year-on-year to ₹2,202.4 crore, while pre-provision operating profit rose 50% to ₹1,252.4 crore. Profit before tax jumped 161% to ₹928.6 crore.

IIFL Finance’s consolidated assets under management stood at ₹1,15,523 crore, up 38% year-on-year and 7% quarter-on-quarter.

Asset quality, however, saw some sequential pressure. Gross non-performing assets stood at 1.6%, up 9 basis points from the previous quarter, while net NPAs rose by a similar margin to 0.8%. The provision coverage ratio improved to 94%.

The company’s book value stood at ₹333.9, while return on assets was 3.1% and return on equity stood at 19.5%. Its liquidity position was ₹7,148 crore, with the consolidated capital to risk-weighted assets ratio at 24.3%.