India's Shriram Finance to sell housing finance unit to Warburg Pincus for $555 million

BENGALURU (Reuters) -India's Shriram Finance said on Monday it will sell its entire stake in affordable housing finance unit Shriram Housing Finance to U.S. private equity firm Warburg Pincus in a deal valued at 46.30 billion rupees ($554.59 million).

Warburg Pincus, through its affiliate Mango Crest Investment, will now fully own the unit in a market that is seeing a boom in demand for housing loans. It also bought the stake in the unit held by private equity firm Valiant Partners.

Shriram Finance will receive a minimum of 39.10 billion rupees for the unit, with additional amounts contingent on specified events, the company said, without elaborating on the triggers.

The housing finance unit reported a revenue of 14.30 billion rupees in fiscal 2024 and contributed 3.93% to Shriram Finance's revenue.

Post the deal, Shriram Housing Finance will operate as a standalone entity, with Ravi Subramanian continuing as Managing Director and Chief Executive Officer of the housing finance unit.

"Shriram Finance will continue to focus on growth led by the short to medium-tenor consumer finance business," said Y.S. Chakravarti, MD and CEO of Shriram Finance.

Other private equity firms such as Bain Capital and CVC Capital were among those in the fray to buy Shriram Housing Finance, local media had reported earlier this year.

The deal is expected to be completed by Feb. 2025.

Warburg Pincus also holds a stake in affordable housing financier Home First Finance Company, according to its website.

JM Financial, Barclays and Avendus acted as financial advisors to Shriram Finance, Shriram Housing Finance and Valiant.

Shriram Finance, whose stock was included in the blue-chip Nifty 50 index this year beat expectations for fourth-quarter profit last month, boosted by a strong demand for loans.

Shares of Shriram Finance have gained 12% so far this year, compared to a 1% drop in the Nifty Financial Services index.

($1 = 83.4846 Indian rupees)

(Reporting by Ashna Teresa Britto; Editing by Pooja Desai and Tasim Zahid)