CCI approves Warburg Pincus’ acquisition of Shriram Housing Finance.

Shriram Finance Limited has established itself as a trusted and reliable financial institution, catering to the diverse needs of its customers across various sectors. One of the biggest non-banking finance companies (NBFC) in India for retail asset financing is Shriram Finance Limited, with assets under management (AUM) of Rs. 2,24,862 crores. Strong competencies in loan origination, collections, and the appraisal of pre-owned commercial vehicles and other assets have been developed over the last 45 years. It serves 84 lakh customers throughout India through a network of 3,082 branches and 74,645 employees. The purpose of Shriram Housing Finance Limited (SHFL) is to “Find Ways to Fund Homes” in order to assist the nation’s underprivileged population in realizing their dream of owning a home. As of March 31, 2024, the company had 155 branches throughout India, an AUM of Rs 13,762 crore, and a net worth of Rs 1,924 crore.

Shriram Housing Finance’s Rs. 4630 crore handover to Warburg Pincus:

The Competition Commission of India (CCI) has provided its approval for Warburg Pincus to acquire Shriram Housing Finance through its affiliate, Mango Crest Investment. The antitrust regulator has approved the transaction, which is valued at Rs 4,630 crore. During its May 13 board meeting, Shriram Finance Limited (SFL) announced that it had given its approval for the sale of Shriram Housing Finance Limited (SHFL), its housing finance subsidiary, to Warburg Pincus.

The non-bank lender Shriram Finance and minority shareholder Valiant Partners will sell Shriram Housing Finance to the American private equity firm for 4,630 crore in May 2024. Mango Crest Investment Ltd. has acquired a shareholding in Shriram Housing Finance Limited, with approval from the Competition Commission of India (CCI), according to a statement from the CCI. The Republic of Mauritius is the home of Mango Crest Investment Ltd. While Shriram Housing Finance is a housing finance company registered with the National Housing Bank, Mango Crest’s primary business activity is engaging in investment holding activities.

The market capitalization of the non-banking finance company is currently 1.19 lakh crore per share. With a gain of 55.21% so far this year, the Scrip has increased by 72.54% over the last 12 months. In the last half-year, the percentage has increased by 34.98%.

Valiant Partners L.P., Mauritius, a private equity firm, owns the remaining portion of SHFL, while Shriram Finance holds the majority stake. Additionally, Valiant will entirely give up its ownership interest in Warburg Pincus as part of the deal. The sale of SFL’s investment in the subsidiary will yield Rs. 3,900 crore, leading to a roughly 80 basis point increase in the capital-to-risk (weighted) asset ratio (CRAR).

Shriram Finance Ltd. stock price: 

Today, the stock price of Shriram Finance is trading at Rs. 3,175.10 per share, with a 52-week high of Rs. 3,177.00, indicating a potential breakout for the stock.

Conclusion: SFL is selling his arms, which SHFL is on good note, and handing over to the Warburg Pincus for continued growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.