MC Exclusive | Shriram Housing to retain employees after Warburg Pincus acquisition: executive vice chairman Revankar

Umesh Revankar

Shriram Housing Finance is likely to retain all employees after the stake sale to Warburg Pincus as shareholders want the current growth momentum to continue, a top company executive said.

“The company is growing at 56 percent CAGR, and when you are growing you will continue to have the people," Shriram Finance executive vice chairman Umesh Revankar said in an exclusive interview with the Moneycontrol on May 14. "There is no point in laying off people. The shareholders also want growth.”

There are 3,232 employees in the company, according to its latest investor presentation. The company said the housing arm’s assets under management increased at a compound annual growth rate of 56 percent over the past four years.

“We can expect similar growth after the completion of deal,” Revankar said.

The company's assets under management stood at Rs 13,750 crore in March 2024.

The board of Shriram Finance approved the sale of its housing finance subsidiary Shriram Housing Finance Ltd. to Warburg Pincus on May 13. Warburg Pincus will acquire the stake through its affiliate Mango Crest Investment Ltd.

The proposed transaction is valued at Rs 4,630 crore for equity and convertible instruments of Shriram Housing Finance. The deal is expected to be completed by end of this financial year, Revankar said.

After the announcement, Revankar told Moneycontrol Warburg Pincus will infuse additional funds in the housing finance company.

Additional infusion

“The investor will infuse around Rs 1,000 crore in the company for future growth, over the deal value of Rs 4,630 crore,” Revankar said.

The company said in a statement that once the transaction concludes, Shriram Housing Finance 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 underserved population.

The management team of Shriram Housing Finance led by Ravi Subramanian, managing director and chief executive officer, will continue to lead the business, the company said.

Revankar said Shriram Finance is expected to apply to the Reserve Bank of India, the Competition Commission of India, and the National Housing Bank for approval of the stake sale by the end of this month.

Moneycontrol reported on December 15 that Shriram Finance was revisiting options to unlock value in Shriram Housing Finance and had started the 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 a 14.94 percent stake is held by San Francisco-based private equity firm 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.