REUTERS - U.S. Private equity giant Carlyle Group has bought 9 percent of financial services firm India Infoline (IIFL) on the open market, the companies said on Wednesday, building a stake worth $38 million based on current prices.
Private equity firms have been drawn to the finance sector in India, Asia's third-largest economy. Last month, Indian microfinance company Bandhan raised 1.35 billion rupees ($30 million) from the International Finance Corp (IFC), the private equity arm of the World Bank.
In late August, Reuters reported that Future Group was talking to potential buyers including JPMorgan and Kohlberg Kravis Roberts and Co to sell its financial services arm, Future Capital Holdings.
Private equity-backed M&A in Asia has surged 41 percent through September this year to its highest level since the buyout boom in 2007, as overseas buyers look for entries into the region's higher growth markets.
In India, private equity deals have totalled $3.23 billion this year, with close to $500 million of that in the financial services sector, according to Thomson Reuters data.
The vast majority of private equity investments in India are for minority stakes.
Washington-based Carlyle will be invited to join IIFL's board, the Indian company said in a statement.
Carlyle last month filed paperwork for an initial public offering of up to $100 million. It is expected to come to market in the first half of 2012 in a deal that sources have said could raise as much as $1 billion.
IIFL shares closed 2.5 percent up at 71.35 rupees ahead of the announcement in a Mumbai market that fell 0.46 percent. The stock is down 13 percent in 2011, outperforming the broader market, which is down 23 percent.
(Reporting by Anurag Kotoky; Editing by Tony Munroe)