Shriram Finance yet to decide on stake dilution in housing finance arm, may infuse capital by year-end, ET RealEstate

June 24, 2023

Shriram Housing Finance may defer its proposed $100-million share sale to ensure higher valuations while the promoter Shriram Finance is also weighing capital infusion.

“We are still debating about how to infuse capital into the housing finance company. The debate is whether we should infuse capital or we should unlock the value by diluting 10-20% of our holding, or go for an initial public offer. We are not yet clear about the path we want to take,” Shriram Finance Managing Director YS Chakravarti told ET.

Shriram Finance holds 85% of the housing finance subsidiary while the rest is with Valiant Mauritius (P) Ltd.

The mortgage lender, with focus in the affordable housing space, had been in talks with prospective new investors for quite some time but industry sources said that a mismatch in valuation calculations may have come in the way of closing a deal. The company was earlier looking to conclude fundraising in the first quarter of FY24.

“I would rather wait for the right time to derive more value,” Shriram Housing Finance Managing Director Ravi Subramanian said.

While an IPO is also being discussed at the highest level, this may come at a later stage given its lengthy process.

With the current growth momentum, the company may need fresh capital by the end of the fiscal, Chakravarti said.

Its assets under management (AUM) expanded more than 50% year-on-year to Rs 8,047 crore at the end of March. The company maintained an accelerated growth momentum with AUM growing 44% CAGR over the last four years.

It aims to have Rs 10,000 crore AUM by September and expand it further to Rs 13,000 crore by March next year. It received Rs 500 crore infusion from the parent last year.

Shriram Housing is investing in the expansion of its distribution through the addition of branches. It aims to add 40 new branches in FY24 to its existing strength of 131. It also plans to hire 1,000 employees to strengthen its sales and service teams to complement the growth in the branch network.

About three-fourths of its business comes from the western and southern states with average loan size being Rs 16.6 lakh.

  • Published On May 17, 2023 at 07:50 AM IST

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