Renuka Ramnath-led homegrown private equity firm Multiples PE has emerged as the lead contender in the ongoing process to induct a new investor by offloading a minority stake in mortgage lender Shubham Housing Development Finance, four persons in the know told Moneycontrol on the condition of anonymity.
"Multiples PE has entered into exclusive negotiations as part of this deal. The plan is to pick up between 20 per cent to 24 per cent via a combination of primary and secondary issue of shares," said one of the persons above, adding that the discussions may or may not necessarily fructify into a transaction.
A second person also confirmed the above and said that existing shareholders of Shubham Housing Finance, including PremjiInvest, Motilal Oswal PE and others were likely to sell part stake.
A third person familiar with ongoing discussions said that Shubham Housing Finance was an IPO candidate in the next few years and that investors, especially key ones like PremjiInvest, would want to hold on and unlock value later.
Premji Invest, Helion Ventures Partners, British International Investment plc or BII (formerly known as CDC Group plc), Asian Development Bank, Topaz Inclusion Pte. Ltd (Leapfrog) and Motilal Oswal PE are currently invested in the company with Premji Invest holding a 41.49% stake.
A fourth person said that investment bank Avendus Capital was the advisor for the proposed stake sale. Moneycontrol could not independently ascertain the deal quantum and valuations.
Email queries to Shubham Housing Finance and Motilal Oswal PE were left unanswered at the time of publishing this article. Multiples PE, PremjiInvest and Avendus Capital declined to comment.
In June 2022, Shubham Housing raised $112 mn in a round led by BII, LeapFrog, ADB and PremjiInvest.
Incidentally, Multiples PE also backs another housing finance player, Vaastu Housing Finance , with reports indicating that TA Associates may pick up a significant stake in the firm.
According to its website, in the financial services segment, the other portfolio companies of Multiples PE include Acko, APAC Financial Services, Kogta Financial, Niyo, RBL Bank , Sanctum Wealth Management and Veritas Finance.
Gurugram-based Shubham Housing provides retail home loans to low-income borrowers and the company is promoted by Sanjay Chaturvedi and Rupa Basu. It reported a profit of Rs 67 crore in H1 FY2024 on a managed asset base of Rs 4,105 crore as on September 30, 2023 vis-à-vis a profit of Rs 92 crore in FY2023 on a managed asset base of Rs 3,443 crore as on March 31, 2023.
According to a Feb 2 report by ICRA, "The change in the rating outlook to Positive from Stable reflects ICRA’s expectation of continued improvement in Shubham Housing Development Finance Company Limited’s (Shubham Housing) credit profile. The rating action takes note of the improvement in the asset quality indicators and the earnings profile as the company scaled up its operations."
"The ratings also consider Shubham Housing’s diversified funding profile, comprising funding relationships with more than 30 lenders. A sizeable share of the funding is from banks and National Housing Bank (NHB) at competitive rates. However, it would need to continue expanding its lender base further, given its growth plans," the report added.
Recently, vehicle financier Kogta Financial raised $148 million in a Series E funding round from Ontario Teachers’ Pension Plan, giving the Canadian pension fund a significant minority stake in the Jaipur-based non-bank lender.
Moneycontrol was the first to report the fund raise on June 26.
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