Shriram Finance on Monday announced the sale of its entire stake in Shriram Housing Finance Limited (SHFL) to Warburg Pincus for Rs 4,630 crore.
At a meeting, the Board of Directors of the Company considered and approved the proposal for disinvestment/sale/transfer of the Company’s entire stake in Shriram Housing Finance Limited, high value debt-listed non-material subsidiary of the company, it said in a regulatory filing.
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 crores for equity and convertible instruments of SHFL.
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.
Shriram Finance is mainly into commercial vehicle financing, and owns 84.82% in Shriram Housing Finance, while 14.94% stake is held by San Fransisco, California-based private equity player Valiant Capital Management.
Speaking on the development, YS Chakravarti, MD & CEO of Shriram Finance said, “The acquisition of SHFL by Warburg Pincus stands as a testament to the unwavering commitment and dedication of SHFL’s team in establishing a robust and successful business franchise. 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 added.
Narendra Ostawal, Head of India Private Equity, Warburg Pincus said, “Warburg Pincus remains excited about the affordable housing finance segment in India. Under Ravi’s leadership, Shriram Housing Finance has embarked on a remarkable journey positioning itself as one of India’s leading affordable housing finance companies.”
“Their strong team, consistent improvement in financial metrics, geographically diversified presence, customer-first approach, and robust processes are aspects that stand out. Warburg Pincus has a deep history of partnering with exceptional teams, particularly within financial services and we are excited to support Ravi and the management team as the company advances into its next phase of growth,” he said.
Ravi Subramanian, MD & CEO, Shriram Housing Finance, said, “The affordable housing finance segment is poised for significant growth. At Shriram Housing Finance, we are fully committed to creating value for all stakeholders as we establish ourselves as a new-age home finance solutions provider. Our focus on innovative customer-centric solutions, product diversification, and superior customer experience remains steadfast, supported by cutting-edge technology and analytics.”
“With Warburg Pincus’ global expertise and as partners in growth, we’re well-positioned to further build out SHFL and create a larger impact in the Indian housing finance sector.”
JM Financial, Barclays, and Avendus acted as financial advisors to SFL, SHFL and Valiant. Trilegal and Anagram were legal advisors to Shriram Group and Valiant, while Cyril Amarchand Mangaldas advised Warburg Pincus on the transaction.
