Nuvama Stake Sale: PAG Likely Eyeing New Buyers For Its Controlling Stake

Asian investment firm PAG is said to be on the lookout for new buyers to take over its controlling stake in Nuvama Wealth Management Ltd. as talks with current bidders fell through.

The Blackstone-backed private equity firm is looking for a deal worth over Rs 4,000 crore for its 54.74% stake in Nuvama. Though the ask is at a significant discount to the market value of the stake, current bidders like Permira & CVC Capital are still not ready to meet the demand, a person aware of the matter told NDTV Profit.

No binding bids have been submitted by any party, and a few bidders have thus backed out since they are not interested in the deal anymore, a second person explained, on the condition of anonymity.

PAG is said to be looking for more international buyers to pick up its stake in order to find a higher quotation than the ones it currently has, a financial advisor working on the deal said.

Those close to PAG, though, disagree that the deal will be closed at a discount to the current market valuation. At current market pricing, the Asia-focused firm's stake is worth over Rs 12,000 crore.

A fourth person close to the private equity fund said that PAG is in no hurry to close the deal. Nuvama Wealth is a trophy asset for the investor. There’s no pressure for PAG to sell – in terms of both pricing and timing, this person added. Apart from the sale of the controlling stake, PAG continues to explore various other options, the fourth person said. These options include a partial sale, convertible bond issuance, continuance fund or abandoning the deal altogether.

In 2021, PAG had acquired a 61.5% stake in Nuvama—which was called Edelweiss Wealth Management back then—for Rs 2,366 crore.

To be clear, any deal involving a change of control will trigger an open offer for 26% of shares held by minority shareholders.

NDTV Profit has reached out to all the firms mentioned in the story for their comments.

Nuvama Wealth's association with Jane Street Group is unlikely to have impacted any timeline for closing the deal, since it was already being pitched at a steep discount, one of the abovementioned people explained.

Nuvama has recently been in the news over its association with Jane Street Group. NDTV Profit had earlier reported that Jane Street and its entities were the client of Nuvama and operated through the broking arm of the domestic capital market firm.

While addressing analysts during a conference call on August 14, Nuvama Wealth's MD & CEO Ashish Kehair said that the Jane Street investigation may have some bearing on the company's second-quarter results. The total impact on net profit would be in the range of Rs 15-20 crore for the year, he had said.

"But given the run rate which we are seeing both from our existing clients ramping up their balances and the new client pipeline which we have, by maybe the end of October or the middle of November, we will come back to the same levels where we were, assuming Jane Street is 0," Kehair said.

In July, income tax officials conducted a survey at Nuvama's office in Mumbai's business district of Bandra-Kurla Complex, and sources indicated that this was linked to an ongoing investigation into Jane Street's market manipulation.

Jane Street could contribute up to 20% of Nuvama's asset service business, according to a July note by analysts at Jefferies. The note anticipated an impact of as much as 8% on Nuvama’s earnings due to the regulatory crackdown.