Merger and Acquisition

Warburg Pincus Acquires Shriram Housing Finance in a Rs 4,630 Crore Deal

• ByStartupStory     |    May 14, 2024

In a significant move within the financial sector, Shriram Finance Limited (SFL) has announced the sale of its subsidiary, Shriram Housing Finance Limited (SHFL), to global investment firm Warburg Pincus. The transaction, valued at Rs 4,630 crore, encompasses equity and convertible instruments of SHFL and will proceed through Warburg Pincus’ affiliate, Mango Crest Investment Ltd.

This strategic divestiture is still subject to regulatory approvals but marks a pivotal moment for SFL, which currently holds a majority stake in SHFL. The remaining shares are owned by Valiant Partners L.P., a private equity entity based in Mauritius. This move comes as part of a broader push within the consumer finance sector to capitalize on burgeoning market opportunities.

Umesh Revankar, Executive Vice-Chairman of Shriram Finance Ltd., commented on the deal, stating, “With the rapid growth in the consumer finance sector, both SFL and SHFL foresee tremendous opportunities in their respective operating segments.” He further noted the potential for Shriram Housing Finance to “unlock greater value” as it continues to serve the underserved market segment in India’s housing finance landscape.

Post-acquisition, SHFL is set to operate as an independent entity retaining its current management team. Ravi Subramanian will continue to helm the team, steering the company through its next growth phase under the new ownership.

The divestiture is aimed at maximizing value creation for both entities allowing them to independently achieve their long-term objectives. “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,” Revankar added.

Shriram Finance, founded in 1979 and one of India’s leading non-banking financial companies (NBFC), serves over 84 lakh customers, offering a variety of financial products including commercial vehicle loans, two-wheeler loans, and MSME financing. SHFL has been a transformative player in the affordable housing segment, showing a robust 56% CAGR in Assets Under Management (AUM) over the past four years.

The transaction was advised by financial firms JM Financial, Barclays, and Avendus, with legal counsel provided by Trilegal and Anagram for Shriram Group and Valiant, and Cyril Amarchand Mangaldas for Warburg Pincus. This acquisition highlights the continuing interest and confidence in India’s financial sectors, particularly in housing finance, signaling a positive outlook for growth and investment in this vital area.

Follow Startup Story