Shriram Finance exits housing finance business, sells entire 85% stake to Warburg Pincus for Rs 4,630 crore

MUMBAI: The largest auto-focused non-bank lender Shriram Finance has decided to exit the housing finance vertical and has agreed to sell its entire 85 percent stake to the American private equity major Warburg Pincus for a consideration of Rs 4,630 crore after 13 years of operations.

The Chennai-based group, began way back in 1974, had been in discussions with many prospective bidders for the sale of Shriram Housing Finance for a few months now and was also in dialogue with the UAE sovereign wealth fund Mubadala and another private equity majors Bain Capital and BPEA EQT, but the talks did not proceed.

The Shriram Group, founded by industry veterans Ramamurthy Thyagarajan, AVS Raja and T Jayaraman in April 1974, had invested Rs 665 crore so far into the company and is exiting with a hefty profit.

“When the going is good we thought of exiting for better value-unlocking. The entire proceeds from the sale will go to Shriram Finance and will be used to augment our growth capital. Yes we’re completely exiting the vertical with this sale and so is our long-time partner Valiant Capital which came on board from the very beginning of our operations in early 2011,” Umesh Revankar, the executive vice-chairman of Shriram Finance told The New Indian Express this evening.

Shriram Housing had a loan book of Rs 13,762 crore for the year ending March 2024 and its net income stood at Rs 24 217 crore.

Revankar further said, the entire 3,000 plus employees along with the management will continue with the new owners and Ravi Subramian, who has been with the company from the beginning will continue to lead the firm under Warburg.

In the joint statement, Shriram Housing Finance and the parent Shriram Finance said Warburg Pincus will acquire the complete stakes from Shriram group and the external investor Valiant Capital Management through its affiliate Mango Crest Investment and the transaction is subject to regulatory approvals.

The transaction value of Rs 4,630 crore is for equity and convertible instruments of the company, which provides loans to purchase or construct residential units and also loans against property, being sold, the statement added.

The parent Shriram Finance, which is mainly into commercial vehicle financing, owns 84.82 percent in the housing finance arm, while 14.94 percent stake is held by the San Francisco-based private equity player Valiant, which will also completely exit the group and Warburg will snap them up.