This size of capital infusion will be a good 20% more than what it had promised earlier as part of the acquisition deal with the global private equity firm becoming more comfortable with the local lender’s business strategy and delinquency trends.
“They are genuinely betting big on the housing finance company,” a person familiar with the development said.
“The company has seen one of the best growth rates, bounce rates and best in class delinquency level despite a book which has about 80% self-employed,” the person said.
Neither Shriram Housing Finance nor Warburg Pincus commented on the development.
The New York-based private equity firm has fully acquired Shriram Housing Finance from its promoter Shriram Finance and minority shareholder Valiant Capital Management for Rs 4630 crore, in the largest M&A deal in the housing finance sector.The share transfer process was completed Wednesday. Shriram group owned 84.44% in the mortgage lender while San Francisco-based PE Valiant Capital Management owned the balance stake.Warburg Pincus has acquired the stakes through its affiliate Mango Crest Investment from all the sellers.
In a message to employees Wednesday, the Shriram Housing management said that the additional capital would open new opportunities for growth and strengthen its position in the market.
The lender had assets under management of Rs 15236 crore at the end of September, growing 10.7% over March-end position. The company had grown its AUM at 52% compounded average growth rate (CAGR) over the last three years from Rs 3,929 crore as on March 31, 2021 to Rs 13,762 crore as on March 31, 2024. Its gross non-performing assets ratio stood at 1.03% at the end of March.
In FY24, it earned a net profit of Rs 217 crore on a total income of Rs 1,430 crore, as against Rs 138 crore net profit and Rs 774 crore total income in FY23.
The company’s tangible net worth stood at Rs 1,924 crore at the end of the previous fiscal.