Shriram Finance to sell 15% stake in residential arms for $121 million: report

After the equity infusion, Shriram Finance’s stake in the housing division will come down to around 70%. (File)


Shadow lender Shriram Finance is looking to acquire a 15% stake in its housing finance arm at a price of 10 billion rupees ($121.35 million), two senior sources with direct knowledge of the matter told Reuters.

Shriram Housing Finance Ltd. mainly offers home loans in the affordable housing segment. The company has received interest from several private equity players, including BPEA EQT, formerly Baring PE Asia.

“The equity infusion could be as high as 10 billion rupees ($121.46 million),” said the first source, speaking on condition of anonymity. The company may take a final call on the deal by the end of March after evaluating all offers, the person added.

Shriram Housing Finance is a unit of Shriram Finance, one of India’s largest non-banking finance companies, formed in November through the merger of Shriram Capital, Shriram City Union Finance and Shriram Transport Finance.

After the equity infusion, Shriram Finance’s stake in the housing division will come down from 85% to 70%, two sources said.

The sources declined to be quoted because the negotiations are still under wraps.

As of December-end, Shriram Finance held an 85% stake in Shriram Housing Finance, while San Francisco-based Valiant Capital Management, LP held the rest.

“There is a lot of interest from private equity investors,” said a second source. The company is already in preliminary talks with two or three investors, the source added.

A spokesperson for Shriram Housing Finance declined to comment, saying the company does not comment on speculation.

If the deal goes through, Shriram Housing Finance may delay its public listing plan by at least four to five years, the first source said.

A second source said the housing financier plans to raise 40 billion rupees through debt in the next financial year, which begins in April, when the stake sale closes.

At the end of the December quarter, Shriram Housing Finance had total assets under management of Rs 71.78 billion, with more than Rs 10 billion in loans.

(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)

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