The financial world is closely watching one of the most significant cross-border investThe financial world is closely watching one of the most significant cross-border investment banking acquisitions in recent memory: Japan's Mizuho Financial Group's proposed $700-800 million acquisition of India's homegrown investment banking powerhouse, Avendus Capital.

The Genesis of Two Financial Titans

Avendus: From Startup to Investment Banking Powerhouse

Founded in 1999 by three IIT alumni; Ranu Vohra, Gaurav Deepak, and Kaushal Aggarwal – Avendus Capital emerged from Mumbai's financial district as a boutique investment bank with ambitious global aspirations. What began as a specialized advisory firm has evolved into one of India's most respected financial services organizations, operating across investment banking, institutional equities, wealth management, credit solutions, and asset management.

The company's growth trajectory has been impressive. From its humble beginnings, Avendus expanded to maintain offices in 10 Indian cities plus international presence in New York and Singapore. In the nine months ending December 2024, the firm reported consolidated revenue of Rs 1,035 crore and net profit of Rs 170 crore, reflecting a healthy profit margin of over 16%. The 2022 acquisition of Spark Capital significantly enhanced its capital markets capabilities, positioning Avendus as a comprehensive financial services provider.

Avendus has carved out a distinctive niche in India's investment banking landscape, particularly excelling in technology, internet, and IT services advisory work. The firm has advised on deals worth up to $2 billion across public and private markets, working with prominent companies including Swiggy, Lenskart, FirstCry, Yes Bank, and the Mahindra Group. Its breakout transaction—advising a government panel on the Satyam Computer Services rescue, which was ultimately acquired by Tech Mahindra—established its reputation as a trusted advisor for complex, high-stakes transactions.

Mizuho: 150 Years of Banking Excellence

Mizuho Financial Group traces its remarkable history back to 1873 with the establishment of Dai-Ichi Bank, Japan's first modern bank. The current entity emerged from the 2002 merger of three historic Japanese financial institutions: Dai-Ichi Kangyo Bank, Fuji Bank, and the Industrial Bank of Japan—a consolidation that initially created the world's largest bank by assets.

Today, Mizuho stands as Japan's third-largest megabank with approximately $1.9 trillion in assets, serving as one of the world's systemically important financial institutions. The group employs over 60,000 people worldwide across 35 countries and 800 offices, providing comprehensive financial services including banking, securities, trust, and asset management.

Mizuho's international expansion strategy has been both methodical and aggressive. The bank serves approximately 80% of Forbes Global 200 companies and 70% of companies listed in Japan. Its global Corporate and Investment Banking division has established strong positions in key markets, with particular strength in Asia-Pacific, where it operates through multiple subsidiaries and maintains deep relationships with multinational corporations.

Mizuho's Strategic Deal Flow: Building a Global Investment Banking Empire

Southeast Asian Expansion and Asset Management Growth

Mizuho's investment banking presence in Southeast Asia reflects a carefully orchestrated expansion strategy. The bank has established significant operations across the region, offering comprehensive corporate and investment banking services through its Singapore hub. In Vietnam, Mizuho has maintained a presence since the late 1990s, with branches in both Hanoi and Ho Chi Minh City, and strategic investments including a 15% stake in Vietcombank and approximately 7.5% of MoMo, Vietnam's leading digital payment platform.

The bank's asset management capabilities have been similarly impressive. Through Asset Management One, Mizuho consolidates its group asset management services, serving individuals, pension funds, and corporations with diversified investment solutions. The company's approach emphasizes creating customized solutions across various asset classes, leveraging its extensive research capabilities and global market insights.

The Greenhill Acquisition: A Template for Success

Mizuho's 2023 acquisition of Greenhill & Co. for approximately $550 million serves as a crucial precedent for the Avendus deal. The acquisition brought Mizuho a premier M&A advisory firm with a 27-year history of advising on significant global transactions, operating from 15 locations worldwide. Importantly, Mizuho preserved the Greenhill brand and leadership team, demonstrating its commitment to maintaining the acquired firm's culture and client relationships while providing additional resources and global reach.

The Greenhill acquisition has proven successful, with the combined entity leveraging Mizuho's capital markets strength and Greenhill's M&A expertise to create a more comprehensive service offering. This transaction established Mizuho's playbook for strategic acquisitions: acquire local market leaders, preserve their brand and culture, and integrate their capabilities with Mizuho's global platform to create enhanced value propositions for clients.

Investment Banking Diversification Strategy

Mizuho's investment banking division has systematically diversified across products and geographies. The bank ranks as a top underwriter of investment-grade corporate debt in Asia and maintains leading positions in equity capital markets. In M&A advisory, recent notable transactions include advising on deals worth billions of dollars, such as Brookfield Infrastructure Partners' $13.3 billion acquisition of Triton International and Roark Capital Group's $9 billion acquisition of Subway.

The bank's approach emphasizes leveraging its corporate banking relationships to identify investment banking opportunities, creating a virtuous cycle where traditional banking services lead to higher-margin advisory and capital markets transactions.

Potential Positive Synergies: A Complementary Partnership

Market Access and Client Base Expansion

The proposed Mizuho-Avendus combination creates compelling synergies across multiple dimensions. Mizuho's global client base of large multinational corporations complements Avendus's strength in serving Indian mid-market companies and emerging growth businesses.This combination would give Mizuho immediate access to India's vibrant startup and technology ecosystem, while providing Avendus clients with global capital markets access and cross-border transaction capabilities.

Avendus's deep relationships with over 2,500 client relationships across India would provide Mizuho with an established local presence that would typically take years to develop organically. Conversely, Mizuho's relationships with approximately 1,400 Japanese companies operating in India present immediate cross-selling opportunities for Avendus's advisory and financing services.

Product and Service Integration

The deal would create one of the most comprehensive financial services platforms in India. Mizuho's strength in capital markets, trade finance, and corporate lending would complement Avendus's expertise in M&A advisory, private equity fundraising, and wealth management.This integration would enable the combined entity to provide end-to-end financial services to clients, from initial fundraising through public listings and eventual strategic transactions.

Particularly valuable would be the combination of Mizuho's global distribution capabilities with Avendus's local origination expertise. Indian companies seeking international expansion could access Mizuho's network across Asia, the Americas, and EMEA, while international companies entering India would benefit from Avendus's local market knowledge and regulatory expertise.

Technology and Innovation Synergies

Both institutions have invested heavily in digital transformation and fintech capabilities. Mizuho's digital strategy emphasizes co-creation with diverse partners and embedded finance solutions, while Avendus has modernized its platforms with enhanced CRM systems, digital client onboarding, and mobile applications. The combination would accelerate innovation by pooling technological resources and development capabilities.

What's Holding Up the Deal?

Stakeholder Alignment Challenges

Despite months of negotiations, several factors have complicated deal completion. The most significant obstacle involves disagreements among key stakeholders regarding exit terms and post-acquisition arrangements. Ranu Vohra, one of Avendus's co-founders, seeks to exit the company entirely and is negotiating an exit premium, while his co-founders Gaurav Deepak and Kaushal Aggarwal are expected to remain with the company under extended employment contracts.

The complexity increases with minority shareholders. Gaja Capital and other early investors are also seeking to exit alongside KKR, but disagreements over valuation and terms have created delays. These "softer terms" in what sources describe as a "people-centric" business include employment contracts, potential restructuring plans, shareholder rights, and day-to-day operational control.

Valuation Disputes and Market Dynamics

Valuation remains a contentious issue despite apparent agreement on headline figures. While reports suggest a $700-800 million enterprise value, the distribution of proceeds among various stakeholders continues to generate friction. KKR, which invested approximately Rs 950-1,000 crore in 2015, expects higher than incumbent return on its investment, but the exact exit premium for founders and the treatment of minority shareholders remain under negotiation.

Market conditions have also influenced the deal timeline. The funding winter of FY24 impacted Avendus's revenues, though the company is expected to recover with projected revenues of Rs 1,300-1,400 crore in FY25. This recovery trajectory affects valuation discussions and stakeholder expectations about future performance.

Competition from Alternative Bidders

The process has been complicated by renewed interest from other bidders. Carlyle Group had re-entered discussions after initial talks with Mizuho slowed, while Nomura—initially the sell-side advisor—had expressed interest in becoming a bidder itself. This competition has created leverage for sellers but has also prolonged the negotiation process as parties evaluate multiple options.

Strategic Implications for India

Strengthening India's Capital Markets Infrastructure

The Mizuho-Avendus deal represents broader trends in India's financial services landscape. Japanese financial institutions are increasingly viewing India as a critical growth market, with SMBC's investment in Yes Bank and various NBFC acquisitions by Japanese players demonstrating sustained strategic interest. This influx of foreign capital and expertise strengthens India's domestic capital markets by bringing global best practices, expanding distribution networks, and increasing competition.

For India's ambitious infrastructure and development goals, having internationally connected investment banks provides crucial support for capital raising and project financing. The combined Mizuho-Avendus entity would be better positioned to support large-scale infrastructure projects requiring both domestic expertise and international capital.

Regulatory Environment and Market Access

India's evolving regulatory framework for foreign investment in financial services has become increasingly accommodating. Recent increases in FDI limits for insurance (from 74% to 100%) and streamlined approval processes signal the government's commitment to attracting foreign financial services investment. These changes create a more favorable environment for international banks to establish substantial Indian operations.

The RBI's willingness to consider foreign investments in financial institutions on a case-by-case basis, as demonstrated in the SMBC-Yes Bank transaction, suggests regulators recognize the benefits of foreign expertise and capital in strengthening India's financial sector. This approach balances foreign investment benefits with domestic market protection.

Impact on Domestic Competition

The entry of well-capitalized international players like Mizuho could intensify competition in India's investment banking sector. This competition typically benefits clients through improved service quality, innovative products, and competitive pricing. However, it also challenges domestic players to enhance their capabilities and differentiate their offerings.

What's In It for KKR?

Financial Returns and Portfolio Management

The exit timing appears strategic, capitalizing on increased foreign interest in Indian financial services while avoiding potential market volatility. KKR's stake sale also demonstrates the firm's portfolio management discipline, realizing gains when market conditions and strategic buyer interest align favorably.

Strategic Validation and Future Opportunities

The successful exit provides validation for KKR's India investment strategy and enhances their reputation as a value-added partner for Indian companies seeking growth capital. This reputation is valuable for future deal origination in India's expanding private equity market.

Moreover, KKR's relationship with Mizuho through this transaction could lead to future collaboration opportunities. As Mizuho expands in India and potentially other Asian markets, KKR's portfolio companies could benefit from Mizuho's banking and financial services capabilities.

Recycling Capital for New Opportunities

The Avendus exit provides KKR with significant capital to redeploy in new Indian opportunities. India's private equity market continues expanding rapidly, with increasing opportunities in technology, healthcare, financial services, and infrastructure. The successful Avendus exit enhances KKR's ability to raise future India-focused funds and pursue larger investments.

Conclusion: A Transformative Deal for Multiple Stakeholders

The proposed Mizuho-Avendus acquisition represents more than a simple corporate transaction—it symbolizes the deepening integration between Japan and India's financial markets and the evolution of India's investment banking sector toward greater international connectivity. Despite current delays, the strategic logic for all parties remains compelling.

While execution challenges remain, particularly around stakeholder alignment and post-acquisition integration, the fundamental strategic rationale suggests eventual deal completion. When finalized, this transaction will likely serve as a template for similar cross-border financial services combinations, further integrating Asian capital markets and supporting regional economic development.

Investment banking acquisitions in recent memory: Japan's Mizuho Financial Group's proposed $700-800 million acquisition of India's homegrown investment banking powerhouse, Avendus Capital.

By Vaanchhit Agarwal