Shriram Finance to divest housing finance arm to Warburg Pincus in Rs 4,630cr deal

In a major strategic move, Shriram Finance Limited (SFL), a leader among India‘s non-banking financial companies (NBFCs), has agreed to sell its subsidiary, Shriram Housing Finance Limited (SHFL), to global growth investor Warburg Pincus. The transaction, valued at Rs 4,630 crores, includes equity and convertible instruments of SHFL. Warburg Pincus will execute the purchase through its affiliate Mango Crest Investment Ltd, acquiring stakes from all current shareholders, including the private equity firm Valiant Partners L.P. from Mauritius, which will also divest its complete stake.

Impact on Shriram Housing Finance Limited

Following the transaction, Shriram Housing Finance Limited will operate as an independent entity. This marks a significant milestone in SHFL’s journey, emphasizing the remarkable value it has created in the affordable housing finance sector in India. SHFL has reported robust annual growth, with a compound annual growth rate (CAGR) of 56% over the past four years. The company’s strategic positioning and performance have made it a key player in transforming India’s housing finance landscape.

Shriram Finance Limited announces the sale of its housing finance subsidiary to Warburg Pincus for Rs 4,630 crores, marking a strategic shift in the Indian financial sector.

Statements from Leadership

Umesh Revankar, Executive Vice-Chairman of Shriram Finance Ltd., highlighted the transaction’s benefits, stating, “Over the years, SHFL has built a differentiated business and a strong brand, providing accessible and innovative financial solutions across the Indian housing finance landscape.” He noted that the deal comes at a crucial growth juncture, potentially unlocking significant value for both Shriram Housing Finance and its stakeholders.

Y.S. Chakravarti, MD & CEO of Shriram Finance Ltd., reflected on the strategic timing of the transaction, “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.”

Ravi Subramanian, MD & CEO of Shriram Housing Finance, expressed enthusiasm about the future, noting, “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.”

Warburg Pincus’s Commitment to Indian Market

Narendra Ostawal, Head of India Private Equity at Warburg Pincus, commented on the investment, “Warburg Pincus remains excited about the affordable housing finance segment in India… We are excited to support Ravi and the management team as the company advances into its next phase of growth.”

Advisors to the Deal

The transaction saw financial advisory services provided by JM Financial, Barclays, and Avendus, while legal advisement was handled by Trilegal and Anagram for the Shriram Group and Valiant, and Cyril Amarchand Mangaldas for Warburg Pincus.

This divestiture by Shriram Finance Limited of its housing finance subsidiary to Warburg Pincus not only marks a significant realignment within the Indian financial services sector but also sets the stage for both entities to pursue their respective growth and strategic objectives independently.