US-based private equity player, Valiant Partners, is planning to pick up a 22.75 per cent stake in Shriram Housing Finance Limited, part of the Rs 50,000-crore Shriram Group.
The investment will be done through Mauritius-based Valiant FDI Ventures, which manages a $3.2-billion fund. It may be noted that Valiant had already invested in companies like Shriram Transport, online travel services company Yatra and others in India.
R Kannan, managing director, Shriram City Union Finance (SCUF), which promotes Shriram Housing, said that “the money will come in three tranches, spread over three years. If we need, the second tranche will come in nine months itself. The investor will buy shares at a premium of Rs 35 per share. The listing of Shriram Housing will happen by the end of the fifth year.”
The deal envisages a cumulative investment of Rs 170.52 crore by Valiant and Rs 165.44 crore by SCUF. The infusion by SCUF will be at Rs 10 a share and that of Valiant will be at Rs 35 a share in all tranches.
The post-money equity valuation of Shriram Housing is expected to be Rs. 750 crore, excluding the possible accruals of profits in this period.
SCUF has forayed into the mortgage business through its wholly-owned subsidiary Shriram Housing Finance in 2010.The company was started with a capital of around Rs 100 crore, which was infused by SCUF. The company, which started operations in January, currently has a loan book size of around Rs 10 crore.
Focus of the new company will be housing finance, mortgage finance and other related finances and such other activities as may be decided from time to time. The main focus of the company will be on Tier-II and Tier-III cities.