TPG Capital in talks to buy up to 20% stake in India's IIFL Capital Services, sources say

By Gopika Gopakumar and Vibhuti Sharma

Jan 7 (Reuters) - TPG Capital is in talks to buy a stake of up to 20% in Indian securities firm IIFL Capital Services IIFS.NS, according to two sources familiar with the deal.

Due diligence is underway on the deal, they said. If completed, the deal could make TPG a strategic investor with a say in management decisions, marking the latest in a series of foreign bets on the Indian financial sector.

U.S. buyout group TPG TPG.O, TPG Capital's parent, declined to comment, while IIFL Capital Services did not respond to a request for comment.

Earlier on Wednesday, local newspaper the Economic Times reported that TPG was closing in on a deal to acquire 30% to 40% of IIFL Capital Services. The deal size was estimated to be in the range of 36.36 billion rupees to 48.48 billion rupees ($404.3 million to $539.1 million).

Both Reuters sources said the deal would be smaller with an initial purchase of up to 20%.

Reuters could not determine the size of the deal.

IIFL Capital Services shares rose as much as 5.3% to 411.30 rupees in early trading before paring gains to trade 1.4% higher in the afternoon session. Last year, its shares rose about 11%.

IIFL Group founder Nirmal Jain has said he plans to enter new businesses like alternative investment funds and private credit, one of the sources said.

Wealth management could also be an area targeted by the firm, the second source said.

Assets under management of the country's wealth management industry are expected to more than double to $2.3 trillion by the 2028-2029 financial year from $1.1 trillion in 2023-2024, according to a Deloitte report from last year.