Shriram Finance Ltd Approves Sale Of Shriram Housing Finance To Warburg Pincus

Shriram Finance Limited (SFL), in its board meeting held earlier today approved the sale of its housing finance subsidiary Shriram Housing Finance Limited (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. 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.

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

This transaction marks a significant strategic milestone in the journey of Shriram Housing Finance underscoring the exceptional value it has created. Following the conclusion of this transaction, Shriram Housing Finance Limited will operate as a standalone entity, continuing to enhance value for its stakeholders as it preserves its heritage and mission to provide housing finance solutions to the under-served population of the country.

The existing management team of SHFL led by Ravi Subramanian, Managing Director and Chief Executive Officer, will continue to lead the business.

Umesh Revankar, Executive Vice-Chairman, Shriram Finance Ltd. 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.”

Y.S. Chakravarti, MD & CEO, Shriram Finance Ltd. added “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. We believe that this transaction is in the best interest of SHFL shareholders towards greater value generation and comes at an opportune time for us as well. Shriram Finance Limited will continue to focus on growth led by the short to medium-tenor consumer finance business while Shriram Housing Finance will now chart out its differentiated path.”

Ravi Subramanian, MD & CEO, Shriram Housing Finance, said, “The affordable housing finance segment is poised for significant growth. 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. Our focus on innovative customer-centric solutions, product diversification, and superior customer experience remains steadfast, supported by cutting-edge technology and analytics. With Warburg Pincus’ global expertise and as partners in growth, we’re well-positioned to further build out SHFL and create a larger impact in the Indian housing finance sector.”

Narendra Ostawal, Head of India Private Equity, Warburg Pincus said, "Warburg Pincus remains excited about the affordable housing finance segment in India. Under Ravi’s leadership, Shriram Housing Finance has embarked on a remarkable journey positioning itself as one of India’s leading affordable housing finance companies. Their strong team, consistent improvement in financial metrics, geographically diversified presence, customer-first approach, and robust processes are aspects that stand out. Warburg Pincus has a deep history of partnering with exceptional teams, particularly within financial services and we are excited to support Ravi and the management team as the company advances into its next phase of growth."

JM Financial, Barclays, and Avendus acted as financial advisors to SFL, SHFL and Valiant. Trilegal and Anagram were legal advisors to Shriram Group and Valiant, while Cyril Amarchand Mangaldas advised Warburg Pincus on the transaction.