Shriram Finance gains after divesting stake Shriram Housing to Warburg Pincus

Shriram Finance (SFL) added 1.74% to Rs 2340.85 after the company said that its board has approved the sale of its housing finance subsidiary Shriram Housing Finance (SHFL) to Warburg Pincus, a leading global growth investor.

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. SFL shall receive a minimum consideration of Rs 3,909 crore, along with certain additional amounts based on occurrence of identified events. The transaction is subject to regulatory approvals.

SFL 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.

SHFL one of India's leading players in the affordable housing segment, has built a strong growth trajectory, playing a transformational role in the Indian housing financing industry. The company has been reporting a robust AUM growth rate of 56% CAGR over the last 4-year period. The company had recorded revenue of Rs 1,429.56 crore during the financial year ended on 31 March 2024.

Umesh Revankar, executive vice-chairman, Shriram Finance, commented: Over the years, SHFL has built a differentiated business and a strong brand, providing accessible and innovative financial solutions to meet diverse customer needs across the Indian housing finance landscape. The company has been reporting industry leading CAGR while building superior asset quality.

With the rapid growth in the consumer finance sector, both SFL and SHFL foresee tremendous opportunities in their respective operating segments. We believe that at this cusp of growth, Shriram Housing Finance is set to unlock greater value as it empowers underserved millions to own homes.

This transaction aims to maximize value creation for both SFL and SHFL, as both companies independently fulfill their respective long-term vision. We welcome Warburg Pincus and look forward as SHFL continues to build on its legacy and embrace its next phase of growth.

Shriram Finance is one of the Indias leading NBFCs, serving over 84 lakh customers across India offering commercial vehicle loans, two-wheeler loans, and MSME financing.

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