Warburg Pincus and the Abu Dhabi Investment Authority (ADIA) will invest a combined $877m in India’s IDFC FIRST Bank through a structured convertible equity deal, giving the private equity firms a potential 15% ownership in the lender.

Warburg’s affiliate, Currant Sea Investments B.V., will contribute approximately $570m for a 9.8% stake, while ADIA’s vehicle, Platinum Invictus B 2025 RSC, will invest roughly $307m for a 5.1% stake. The deal includes a board seat for Warburg Pincus and is subject to shareholder and regulatory approval.

The capital injection will support IDFC FIRST Bank’s next phase of growth. CEO V. Vaidyanathan said the bank aims to expand its loan book by 20% annually and described the transaction as a “set-up for the next phase of growth.” The funding will also boost the bank’s capital adequacy ratio to 18.9% from 16.1%.

Despite a 53% drop in net profit in the previous quarter due to increased stress in its microfinance portfolio, the bank reported stable asset quality in its broader loan book. IDFC FIRST’s shares rose 0.5% following the announcement.

The transaction underscores continued private equity interest in India’s banking sector, particularly mid-tier lenders with long-term retail and digital growth potential.

Source: Reuters