Shriram Finance to sell its housing finance arm to Warburg Pincus for Rs4,630 cr

New Delhi: Financial services firm Shriram Finance on Monday said it has approved the sale of its housing finance subsidiary to the US-based private equity firm Warburg Pincus for a consideration of Rs 4,630 crore. Shriram Housing Finance Limited (SHFL) would be acquired by Warburg Pincus through its affiliate Mango Crest Investment Ltd from all the sellers. "The proposed transaction is valued at Rs 4,630 crore for equity and convertible instruments of SHFL," Shriram Finance said in a regulatory filing.

The proposed transaction would be subject to receipt of applicable approvals from regulatory authorities and fulfilment of other customary conditions, it said. As per reasonable estimates, it said the expected time of completion of the transaction is February 7, 2025. "Shriram Finance holds a controlling stake in SHFL while private equity firm Valiant Partners L.P. (Valiant), Mauritius, holds the remaining ownership. As a part of this transaction, Valiant will also completely divest its equity stake to Warburg Pincus," it said.

Shriram Finance is one of India's leading NBFCs, serving over 84 lakh customers across India offering commercial vehicle loans, two-wheeler loans, and MSME financing. SHFL a leading player in the affordable housing segment, has built a strong growth trajectory, playing a transformational role in the housing financing industry, it said, adding, the company has been reporting a robust Asset Under Management growth rate of 56 per cent Compound annual growth rate, or CAGR over the last 4-year period. This transaction marks a significant strategic milestone in the journey of Shriram Housing Finance underscoring the exceptional value it has created, it said.

Following the conclusion of this transaction, it said, Shriram Housing Finance Limited will operate as a standalone entity, continuing to enhance value for its stakeholders as it preserves its heritage and mission to provide housing finance solutions to the under-served population of the country. Shriram Finance MD & CEO Y S Chakravarti said, "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, he said. Narendra Ostawal, Head of India Private Equity, Warburg Pincus said, "We remain excited about the affordable housing finance segment in India...their strong team, consistent improvement in financial metrics, geographically diversified presence, customer-first approach, and robust processes are aspects that stand out." JM Financial, Barclays, and Avendus acted as financial advisors to SFL, SHFL and Valiant.