US investment company, Bain Capital, on Thursday said that $450-million investment in private sector lender Axis Bank is a contrarian bet and expects good returns.
In an exclusive interview to CNBC-TV18's Nisha Poddar, John Connaughton, co-managing partner, said Axis Bank investment is in-line with the strategy of finding assets undervalued by the market.
Connaughton said long term return potential drove stake buy in Axis Bank and the idea is to partner with the management and execute strategy for 3-5 years.
"For us to generate the types of returns, we need to have a stable economy, we need to have support of regulatory and governmental policy structure and as we look at India, the opportunity to do the Bain Capital strategy inside a high growth market is very exciting for us," Connaughton said.
According to Amit Chandra, managing director, there were high expectations from Amitabh Chaudhry as the chief executive officer of Axis Bank and hope that the management will reposition the bank.
Chandra said Chaudhry is a very well regarded leader, which was demonstrated at HDFC Life and expectations are very high from him to reposition Axis Bank.
"We have done three of the most important investments in this market since it opened up; Genpact, Hero MotoCorp and Axis Bank, all three are market defining investments," he said.
Bain Capital expects Axis Bank to use funds to clean up the books by accelerated provisioning, Chandra added.