Shriram Finance Limited (SFL), in its board meeting on May 13 said that it has approved the sale of its housing finance subsidiary Shriram Housing Finance Limited (SHFL) to Warburg Pincus. Warburg Pincus will acquire the stake 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. The transaction is subject to regulatory approvals.
On December 15, Moneycontrol reported that Shriram Finance is revisiting options to unlock value in Shriram Housing Finance Ltd and has launched a process to sell a controlling stake in the subsidiary.
Parent Shriram Finance, which is mainly into commercial vehicle financing, owns 84.82 percent in Shriram Housing Finance, while 14.94 percent stake is held by San Fransisco, California-based private equity player Valiant Capital Management. According to reports in March, private equity firm BPEA EQT had reached advanced negotiations to pick up a minority stake in the housing finance venture, but the talks did not proceed.
As a part of this transaction, Valiant will also completely divest its equity stake to Warburg Pincus. the company said in a regulatory filing.
"Following the conclusion of this transaction, 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," the company further added.
JM Financial, Barclays, and Avendus acted as financial advisors to SFL, SHFL and Valiant.
The existing management team of SHFL led by Ravi Subramanian, Managing Director and Chief Executive Officer, will continue to lead the business.
Commenting on the sale, Umesh Revankar, Executive Vice-Chairman, Shriram Finance Ltd. commented "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 maximize value creation for both SFL and SHFL, as both companies independently fulfill 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.”
Meanwhile, shares of Shriram Finance on May 13 closed 1.63 percent lower at Rs 2,307.60 apiece on BSE.
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