Shriram Finance To Sell Housing Finance Arm To Warburg Pincus In $554 Mln Deal

Shriram Finance Ltd. will sell its entire stake in the housing finance subsidiary to private equity giant Warburg Pincus in a transaction valued at 4,630 crore rupees ($554 million).

Shriram Finance holds a controlling stake in Shriram Housing Finance Ltd. (SHFL), while the remaining stake is owned by Mauritius-based private equity firm Valiant Partners L.P., the Indian non-banking financial company said in a stock exchange announcement.

Valiant will also completely divest its stake to Warburg Pincus as a part of this transaction, it added.

Shriram Finance said its board today approved the sale of SHFL to Warburg Pincus, which will acquire the stake through its affiliate Mango Crest Investment Ltd. from all the sellers.

The proposed transaction is valued at 4,630 crore rupees for equity and convertible instruments of SHFL. Shriram Finance will receive a minimum consideration of 3,909 crore rupees along with certain additional amounts based on occurrence of identified events.

The transaction, subject to regulatory approvals, is likely to conclude by 7 February 2025.

THE FUTURE

“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 Managing Director and Chief Executive Officer Y.S. Chakravarti said.

He added that Shriram Finance will continue to focus on growth, led by the short to medium-tenor consumer finance business, while SHFL will now chart out its differentiated path.

Following the completion of the transaction, SHFL will operate as a standalone entity, led by its existing management team of MD & CEO Ravi Subramanian.

“Warburg Pincus remains excited about the affordable housing finance segment in India,” Narendra Ostawal, head of India Private Equity at Warburg Pincus, said, adding that the private equity major will support Subramanian and the management team as the company advances into its next phase of growth.

SHFL, one of India's leading players in the affordable housing segment, has been reporting a robust AUM growth rate of 56% CAGR over the last four years, according to the statement.

JM Financial, Barclays, and Avendus acted as financial advisors to Shriram Finance, SHFL and Valiant. Trilegal and Anagram were legal advisors to Shriram Group and Valiant, while Cyril Amarchand Mangaldas advised Warburg Pincus on the transaction.

Note: $1 = 83.5541 Indian rupees

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