TVS Credit Services Limited has joined the race for KKR & Co. Inc. (NYSE:KKR)-backed investment bank Avendus Capital Private Limited as part of its strategy to expand the group's financial services business, three people with knowledge of the development said. The financial services arm of the Chennai-based conglomerate has held several rounds of discussions in the last six months ahead of a likely bid, the people cited above said on the condition of anonymity.

US private equity firm KKR & Co. has been looking to find a buyer for Avendus Capital for over a year. TVS Group may acquire Avendus and keep it as a standalone entity within the group, or make an acquisition through TVSCredit, one of the two people cited above said on the condition of anonymity.

"The group is well-funded and can pull this off through internal accruals if need be. It does not need to partner with anyone, " the person said. If needed, TVS may raise debt at a later stage.

Others expected to submit binding bids for Avendus include Nomura Holdings, Inc. (TSE:8604), Mizuho Financial Group, Inc. (TSE:8411) and US buyout firm The Carlyle Group Inc. (NasdaqGS:CG), previous reports have said. KKR had appointed Nomura to find a buyer over a year ago, but the Japanese investment bank recused itself, given its own interest in Avendus. Later, KKR named Rothschild as investment banker.

KKR first invested nearly $120 million in Avendus Capital in 2015. In 2017, it picked up more shares and brought in private equity firm Gaja Capital, valuing the investment bank at around $869 million on a post-money valuation basis, according to VCCEdge. KKR and Gaja Capital together own around 70% stake in Avendus.

Founders and employees, along with private individuals such as former Alliance Tires Group CEO Yogesh Mahansaria own the rest. The second person said 70% stake in Avendus may be valued at $500 million - $700 million. Queries emailed to KKR, Gaja Capital, TVS, Nomura, Mizuho and Carlyle remained unanswered.

Avendus and Rothschild declined to comment. "The deal size would depend on the stake that is eventually sold to the incoming investor and is likely to be finalized in January," the second person added. Avendus CEO Deepak will retain control of the business after the sale, the people cited above said.

All three-co-founders are likely to have a say in the choice of buyer. Final bids for Avendus Capital were due this week. However, according to a third person, the process may enter a definitive negotiation stage only in January given that this is holiday season.