In a strategic move aimed at fueling growth in its core verticals, IndoStar Capital Finance Limited has announced the sale of its subsidiary, IndoStar Home Finance Private Limited (IHFPL), to WITKOPEEND B.V., an affiliate of BPEA EQT Mid-Market Growth Partnership. The deal, valued at INR 1,750 crore on a fully diluted basis, is expected to enhance IndoStar’s capital resources and boost its focus on vehicle financing and small business loans.
The sale, subject to customary regulatory approvals including RBI clearance, will also require lender consent and shareholder approvals. Upon completion of the deal, EQT plans to invest an additional INR 500 crore into IHFPL, positioning the company for continued growth. IndoStar’s Board has granted its in-principle approval for this strategic transaction, which is anticipated to be a key milestone in the company’s growth trajectory.
Bobby Parikh, Chairman of IndoStar Capital Finance, commented on the transaction: “This sale marks an important strategic decision as we aim to drive accelerated growth in our core areas. IndoStar Home Finance, under EQT’s stewardship, will continue to thrive and create value for its stakeholders.”
EQT, a leading global private equity investor, is keen on expanding its portfolio in the retail lending space within India’s financial services sector. The firm views affordable housing finance as a key area for growth, especially considering the favorable government policies and strong demand drivers. Ashish Agrawal, Partner in the EQT Private Capital Asia advisory team, highlighted: “We see long-term potential in India’s affordable housing sector. IndoStar Home Finance has a market-leading position in South India, and we look forward to supporting its expansion and digital transformation.”
For IndoStar, this sale is expected to provide a significant influx of capital, which will be directed towards its key verticals of vehicle finance and small business loans. The company aims to capitalize on its strengthened capital base to drive accelerated growth and value creation.
The transaction was supported by several key advisors: Daiwa Corporate Advisory India Private Limited and Ambit Private Limited acted as exclusive financial advisors to IndoStar, while Cyril Amarchand Mangaldas provided legal counsel. Ernst & Young LLP was involved in the financial and tax due diligence.
IndoStar Capital Finance is a non-banking finance company (NBFC) specializing in commercial vehicle financing and affordable home finance through its subsidiary. It is co-promoted by Brookfield and Everstone and operates across India.
A registered housing finance company, IndoStar Home Finance focuses on affordable housing solutions across India. As of June 30, 2024, it operates in 121 branches across 8 states with a loan book (AUM) of Rs 2,395 crore and employs over 1,000 people.
The sale of IndoStar Home Finance to EQT is a significant step for IndoStar Capital Finance, reflecting its intent to focus on core verticals and harness growth opportunities in vehicle finance and small business loans. Under EQT’s ownership, IndoStar Home Finance is poised for further expansion and success in the affordable housing sector.
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.
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