ADQ-Sheikh Tahnoon vehicle eyes $200 mn stake in Aadhar Housing Finance

Time of India

5 days ago

An investment vehicle backed by Abu Dhabi's ADQ, linked to Sheikh Tahnoon bin Zayed al-Nahyan, is in advanced talks to acquire a 10-12% stake in Aadhar Housing Finance from Blackstone for $200-225 million. This follows Blackstone's near $2 billion capital commitment via a continuation vehicle. The deal highlights strong investor confidence in India's affordable housing sector and Aadhar's growth potential.
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Mumbai: An investment vehicle backed by Abu Dhabi sovereign investor ADQ and partly owned by Sheikh Tahnoon bin Zayed al-Nahyan is in advanced discussions to buy a minority stake in Blackstone-backed Aadhar Housing Finance , said people in the know. Sheikh Tahnoon is the United Arab Emirates national security adviser as well as ADQ chair.The $200-225 million investment (Rs 1,750-2,000 crore) will be made through the secondary sale of shares for a 10-12% stake in the affordable housing finance company, which held an IPO in 2024. A formal announcement is expected in the coming weeks, said the people mentioned cited above.This will follow a larger, near $2 billion (Rs 17,335 crore) capital commitment, by Blackstone along with two of its sponsors or limited partners (LPs). This will be through the transfer of most of Blackstone's existing three-fourths shareholding into a new 'continuation' vehicle, similar to what it did in Mphasis in 2021.Blackstone declined to comment about the identity of the new investor or any other details. ADQ //didn't respond to queries.Over the weekend, the company made a public disclosure that Blackstone funds BCP Asia II Holdco VII Pte, Blackstone Capital Partners (CYM) IX and Blackstone Capital Partners (CYM) IX AIV-FLP have made an open offer to buy 113.5 million Aadhar shares, translating to astake, from public shareholders as per regulations at Rs 469.97 apiece.The open offer was triggered as Blackstone is flipping a majority share (about 64%) of its shareholding from one set of funds to two new funds of the firm at Rs 425 apiece, to ensure continuity. The value of this secondary transaction is Rs 12,000 crore ($1.4 billion). If the open offer is fully subscribed, Blackstone will pay a further Rs 5,335 crore ($620 million) in cash.JM Financial is helping with the open offer. Blackstone may have to sell some stock to comply with the ceiling of 75% non-public shareholding, if the offer is fully subscribed.The stake sale to the new Abu Dhabi vehicle is also expected to be at a similar value.On Friday, Aadhar closed at Rs 496.90 for a market value of Rs 21,469.03 crore. In the past month, it has appreciated 12.11% in anticipation of a transaction. Year to date it is up 18.63% on the back of a robust performance. The company reported a 19% increase in net profit to Rs 237 crore in the first quarter ended June.Continuity funds, in which a private equity group sells assets from one of the funds they manage to a newer one also managed by the firm, are widely prevalent in the west. It's catching on in India with Chrys Capital and Multiples launching similar structures for some of their investments such as National Stock Exchange (NSE), Vastu Housing Finance, Quantiphi and APAC Financial Services.According to investment bank Jefferies, buyout groups have used this strategy, regarded as controversial by some analysts, to exit $ 41 billion of investments in the first six months of 2025. Such transactions hit a record 19% of all sales by the industry for the period, up 60% from a year ago.In developed markets, funds have been struggling to find external buyers or list holdings and return capital to investors. In growth markets like India, they argue that companies like Aadhar have a significant growth runway left for a fund to stay invested and ride the upside. Typically, a fund with a 10-year lifespan will have a three-to-five-year investment horizon.After the IPO, even though several strategic financial groups or funds approached Blackstone to either partially or fully exit Aadhar, a transaction could not be concluded due to valuation mismatches, said people with knowledge of the matter.'Blackstone has been a committed partner to Aadhar since 2019, playing a key role over the past six years in strengthening its position as India's largest affordable housing finance company. That is what made it do an Mphasis with Aadhar too,' said an executive in the know. 'The fundamentals of the affordable housing segment remain strong giving it the confidence to stay invested and even rope in new, high-profile investors.'The industry is likely to see a five-year CAGR of 17-18%.The management and the board will stay in place. Under Blackstone's six-year ownership, Aadhar's AUM has ballooned to $3 billion, 1.2x that of its nearest competitor.Other than ADQ, Abu Dhabi has several sovereign investment funds, including ADIA, Mubadala and AI-focused MGX. The oil-rich emirate has been keen on betting large sums to back new vehicles as it positions itself as a hub of global capital. For example, in 2024, ADQ and Chimera Investment--part of the sprawling business empire of Sheikh Tahnoon–launched Lunate, which has emerged as one of the hottest new asset managers of the region, which has invested in close to 30 deals in one year. Lunate also owns Alterra, a $30 billion climate fund, with international groups BlackRock, TPG and Brookfield. ADQ has committed $6.5 billion to Alterra. Lunate includes Alterra in its assets under management.