Warburg Pincus picks up 25% stake in Home First Finance, IPO by March 2021

Christel Deskins

© Vandana Ramnani Warburg Pincus picks up 25% stake in Home First Finance, IPO by March 2021 Global private equity firm Warburg Pincus is going to pick up a 25 percent stake in the Home First Finance Company, the affordable housing finance company which is also planning an initial public […]



a man wearing a suit and tie: Warburg Pincus picks up 25% stake in Home First Finance, IPO by March 2021


© Vandana Ramnani
Warburg Pincus picks up 25% stake in Home First Finance, IPO by March 2021

Global private equity firm Warburg Pincus is going to pick up a 25 percent stake in the Home First Finance Company, the affordable housing finance company which is also planning an initial public offering (IPO).

The Mumbai-based private lender has entered into definitive agreements with Orange Clove Investments BV (an affiliate of Warburg Pincus LLC) for an investment of approximately Rs 700 crore through a combination of primary fundraise and secondary sales by existing shareholders, as per the release available in the public domain.

Warburg Pincus was looking for 25-30 percent stake in the company but after negotiations, it decided on a 25 percent stake in Home First Finance for nearly Rs 700 crore, at a valuation of around Rs 2,800-3,000 crore, one of the persons close to the negotiations said.

“Home First has had a remarkable journey to become a leading affordable housing finance company in a relatively short span of 10 years. It is helmed by a very talented team and robust operating processes that continue to steer the company to do well through the pandemic and to leverage the growth potential of the affordable segment. Warburg Pincus looks forward to the partnership with True North and towards backing Manoj and the management team in its next phase of expansion,” Narendra Ostawal, Managing Director, Warburg Pincus said.

Home First Finance was talking to Warburg Pincus for stake sale since the February-March period but they wanted to check the performance of the company and industry during the COVID period, people familiar with the development told Moneycontrol. “The investment by Warburg Pincus after lockdowns clearly indicated that things have been showing strong improvements,” they said.

Warburg Pincus, which has more than $53 billion in private equity assets under management, joined existing marquee PE firm shareholders True North Fund, Aether (Mauritius) and Bessemer Venture Partners.

All shareholders including True North, ether (Mauritius) and Bessemer Venture Partners sold shares proportionately in the deal to Warburg Pincus and the price at which the stake sale has taken place could be around Rs 330-340 per share, sources said.

If the stake sale is proportionate, then with the current shareholding pattern, available in the prospectus filed with the Sebi, True North stake could be reduced to 32.1 percent from 42.80 percent, Aether 21.40 percent from 28.54 percent, Bessemer to 11.36 percent from 15.15 percent, PS Jayakumar to 3.6 percent from 4.80 percent and Manoj Vishwanathan to 2.10 percent from 2.81 percent.

“Warburg Pincus’ investment in Home First at this juncture is an acknowledgment of Home First’s inherent strengths,” Chief Executive Officer of Home First Manoj Viswanathan said.

Ambit Capital was the lead adviser and Axis Capital was co-advisor for this transaction.

Incorporated in February 2010, Home First Finance was founded by Jaithirth (Jerry) Rao and PS Jayakumar (MD and CEO of Bank of Baroda).

In March 2017, Jaithirth (Jerry) Rao had transferred its shareholding to India Value Fund V LLP (which is now known as TrueNorth Fund) and its affiliate Aether (Mauritius), which both held 71.34 percent stake in the HFFC as per the prospectus.

In September 2019, True North Value Fund V LLP held 45.84 percent in HFFC, Aether 30.56 percent, Bessemer India Capital Holdings II 16.28 percent and PS Jayakumar 5.16 percent.

HFFC, which provides small-ticket-size housing loans, was hit by COVID-19 but since June, business has recovered and is moving towards normalcy.

“Coming at a time when the whole world is navigating an unprecedented crisis, this transaction is a huge vote of confidence for the affordable housing segment in general and more specifically for the performance of Home First in the face of the crisis,” the company said in its statement.

The company has filed the draft red herring prospectus with the Sebi in December 2019 for its initial public offering and received approval in January, which is valid till February 2021. Now the Sebi has given extension to launch its IPO till March 31, 2021 due to COVID.

People close to this transaction further informed Moneycontrol that with the completion of Warburg Pincus deal, in the coming days, the focus would shift to IPO process and it could be launched in the first quarter of CY 2021.

Generally, every private equity firm invests in companies with a certain timeframe and after a certain period, they generally look for new investors to sell their stake.

Over the last 10 years, Home First has sanctioned home loans to more than 50,000 customers in 60 districts across 11 states and a union territory.

As of March 2020, Home First had an AUM of Rs 3,618 crore with a net worth of Rs 933 crore and GNPA of 0.87 percent.

Source Article

Next Post

Walmart sells Asda to EG-TDR consortium for $8.8 bln

Adds background, quote LONDON, Oct 2 (Reuters) – Walmart Inc WMT.N has agreed to sell its British supermarket chain Asda to private equity group TDR Capital and the founders of petrol station operator EG Group for 6.8 billion pounds ($8.8 billion), it said on Friday. The deal led by Mohsin […]