Warburg Pincus invests Rs 700 cr to acquire stake in Home First Finance

Home First Finance, True North-backed affordable housing finance firm, said it has entered into an agreement with Warburg Pincus-affiliate Orange Clove Investments BV for an investment of Rs 700 cr

Home First Finance, True North-backed affordable housing finance firm, on Friday said it has entered into an agreement with Warburg Pincus-affiliate Orange Clove Investments BV for an investment of about Rs 700 crore.

The investment is a combination of primary fund raise and secondary sales by existing shareholders, it said.

Global private equity firm Warburg Pincus has bought a 25 per cent stake in the housing finance company, according to a source.

As per the agreement, all the existing shareholders including True North Fund V LLP, Aether (Mauritius) Ltd, Bessemer India Capital Holdings, and Bank of Baroda former managing director and CEO P S Jayakumar, have sold their 25 per cent stake on a proportional basis, the source said.

Prior to this transaction, while True North was holding 45.97 per cent, Aether (Mauritius) and Bessemer India owned 30.65 per cent and 16.28 per cent, respectively.

The primary investment by Warburg Pincus is of Rs 75 crore and the balance is through the secondary route, the source said.

"Warburg Pincus' investment in Home First at this juncture is an acknowledgement of Home First's inherent strengths," Home First Chief Executive Officer Manoj Viswanathan said in a release.

He added that the company's strong focus on the salaried customer segment, its investments in technology and deep belief in digital processes and payment mechanisms have netted excellent dividends through multiple disruptive events.

Warburg Pincus Managing Director Narendra Ostawal said, "Warburg Pincus looks forward to the partnership with True North and towards backing Manoj and the management team in its next phase of expansion."

Founded in 2010, Home First has a presence in 60 districts across 11 states and a Union territory with a significant presence in the urbanised regions of Gujarat, Maharashtra, Karnataka and Tamil Nadu.

It targets first-time homebuyers who are typically salaried customers working in small firms or self-employed customers who run small businesses.

As of March 31, 2020, Home First had an asset under management (AUM) of Rs 3,618 crore with a net worth of Rs 933 crore and a gross non-performing asset of 0.87 per cent.

It reported a profit after tax was Rs 79.55 crore during the financial year ended March 31, 2020, against Rs 45.72 crore in the previous year.

The New York-based Warburg has over USD 53 billion in private equity assets under management invested across 185 companies across sectors and geographies.

Ambit Capital was the lead advisor on the transaction, while Axis Capital was the co-advisor.