U.S. private equity firm Warburg Pincus will acquire Shriram Housing Finance Limited (SHFL) from non-bank lender Shriram Finance and minority shareholder Valiant Partners for ₹4,630 crore.
Warburg Pincus will acquire the stake through its affiliate Mango Crest Investment Ltd from all the sellers. The transaction is subject to regulatory approvals.
Shriram Finance holds a controlling stake in SHFL while private equity firm Valiant Partners L.P., Mauritius, holds the remaining ownership. As a part of the transaction, Valiant will also completely divest its equity stake to Warburg Pincus.
Shriram Finance is one of India’s leading non-banking financial companies (NBFCs) with assets under management (AUM) of ₹2.24 lakh crore. It serves over 84 lakh customers across India offering commercial vehicle loans, two-wheeler loans, and MSME financing.
SHFL is one of India's leading players in the affordable housing segment. The company has been reporting a robust AUM growth rate of 56% CAGR over the last four-year period.
Following the conclusion of this transaction, Shriram Housing Finance will operate as a standalone entity, continuing to enhance value for its stakeholders as it looks to provide housing finance solutions to the under-served population of the country, the NBFC says in a statement.
“With the rapid growth in the consumer finance sector, both SFL and SHFL foresee tremendous opportunities in their respective operating segments. We believe that at this cusp of growth, Shriram Housing Finance is set to unlock greater value as it empowers underserved millions to own homes. This transaction aims to maximise value creation for both SFL and SHFL, as both companies independently fulfil their respective long-term vision. We welcome Warburg Pincus and look forward as SHFL continues to build on its legacy and embrace its next phase of growth,” says Umesh Revankar, executive vice-chairman, Shriram Finance.
“We believe that this transaction is in the best interest of SHFL shareholders towards greater value generation and comes at an opportune time for us as well. Shriram Finance Limited will continue to focus on growth led by the short to medium-tenor consumer finance business while Shriram Housing Finance will now chart out its differentiated path,” says YS Chakravarti, MD & CEO, Shriram Finance.
The existing management team of Shriram Housing Finance led by Ravi Subramanian, managing director and CEO, will continue to lead the business.
“The affordable housing finance segment is poised for significant growth. At Shriram Housing Finance, we are fully committed to creating value for all stakeholders as we establish ourselves as a new-age home finance solutions provider. Our focus on innovative customer-centric solutions, product diversification, and superior customer experience remains steadfast, supported by cutting-edge technology and analytics. With Warburg Pincus’ global expertise and as partners in growth, we’re well-positioned to further build out SHFL and create a larger impact in the Indian housing finance sector,” says Subramanian.
