Private Equity Giants Flock to Buy Axis Finance as Promoters Face Regulatory Push

Axis Group’s non-banking financial company (NBFC), Axis Finance, has drawn interest from several private equity giants including Blackstone and Warburg Pincus, as its promoters plan to sell at least a 20% stake in the company. The deal, which could be worth as much as $1 billion, will help its promoters comply with RBI norms.

According to at least two media reports, Blackstone, Kedaara Capital, Advent International, EQT, and Warburg Pincus are among the suitors for the NBFC. Axis Bank has hired Morgan Stanley for the divestment, and the firms are likely to value the company between $800 million and $1 billion.

A Mint report stated that the deal, currently in the due diligence stage, could see binding offers by the end of September. A Moneycontrol report goes a step further, noting that Blackstone, Advent, EQT, and Kedaara have submitted non-binding bids to acquire around a 20% stake in Axis Finance.

It adds that initially, Axis Bank had planned to divest at least 50%, and firms like Carlyle and Advent showed interest. However, the stake on offer was later reduced to 20%, as potential investors preferred that Axis Bank retain control during the transition. The current plan is to begin with a minority divestment, with the possibility of transferring controlling ownership in 2–3 years. The new investor may also receive one or two board seats and the right to nominate members to key board committees, according to the report.

Why Axis Is Selling Axis Finance

Axis Bank is planning to sell a stake in its NBFC arm, Axis Finance, primarily to comply with new RBI regulations and reduce capital support to the subsidiary. In 2024, the bank’s CEO Amitabh Chaudhry said that the RBI had raised concerns about banks holding excessive equity in non-banking units and proposed stricter rules to avoid overlaps between banks and their subsidiaries offering similar financial services.

In response, Axis Bank — which currently owns 100% of Axis Finance — has decided to bring in external investors. Over the years, Axis has infused around ₹1,775 crore into Axis Finance, including ₹600 crore in Q3FY25. The move follows the RBI’s draft circular from October 2024, which proposed curbs on overlapping activities within banking groups.

All About Axis Finance

According to India Ratings, Axis Finance Limited (AFL) reported a 21.7% year-on-year growth in assets under finance (AUF) for FY25, driven mainly by a strong 28.5% rise in retail lending — particularly in loan against property (LAP), which grew 48.1%. MSME lending also saw robust growth of 30.3% on a smaller base. In contrast, wholesale loan growth slowed to 11.5%, reducing its share in total AUF to 43.2%, down from 60.3% in FY20. Within wholesale, AFL is focusing on collateralised LAP and real estate-backed loans, targeting borrowers with stable cash flows.

The company is actively shifting towards retail lending, expanding its offerings to include LAP, business, housing, and personal loans. As a result, retail now accounts for 47.1% of AUF in FY25, up from 40.7% in FY23. AFL plans to further scale this segment by expanding its branch network beyond the current 59 branches and 225 locations.

The credit rating agency expects the retail and MSME segments to eventually form about 65% of the loan mix, enhancing growth potential and yield. However, this shift may also increase operating costs — though AFL aims to manage this through tech-driven expansion into tier-3 and tier-4 markets.