Shriram Finance Stock Surges 5% On Divestment In Housing Finance Arm
Warburg Pincus, a U.S private equity firm will acquire the stake in the affordable housing finance unit through its affiliate, Mango Crest at Rs 4,630 crore
The stock of Shriram Finance rose as much as 5 per cent in the Tuesday trading session after the firm along with Valiant Partners decided to sell its entire stake in Shriram Housing Finance (SHF) to Warburg Pincus.
Shriram Finance stock traded at Rs 2.341 with 1.75 per cent gain in the morning session on the National Stock Exchange (NSE).
Warburg Pincus, a U.S private equity firm will acquire the stake in the affordable housing finance unit through its affiliate, Mango Crest at Rs 4,630 crore.
“The Company shall receive a minimum consideration of Rs 3,909 crore along with certain additional amounts based on occurrence of identified events,” informed Shriram Finance in an exchange filing.
“We believe that this transaction is in the best interest of SHF shareholders towards greater value generation and comes at an opportune time for us as well. Shriram Finance 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,” said Y.S. Chakravarti, MD and CEO, Shriram Finance.
Brokerage firm Morgan Stanely said valuation is 18 per cent lower than its expectation of Rs 5,700 crore. Moreover, the valuation is also lower than housing finance companies like Aavas Finance, Home First Finance and Aptus Value Housing Finance.
In contrast, the valuation offered by Warburg Pincus in-line with the expectation of Axis Capital.
SHF has a pan- India presence with 155 branches and an assets under management (AUM) of Rs 13,762 crore and net worth of Rs 1,924 crore as of 31 March 2024.
The affordable housing finance unit report a revenue of Rs 1,430 crore in FY 2023-24 and contributed 3.93 per cent to Shriram Finance’s revenue.
