Warburg Pincus frontrunner to buy Shriram Housing Finance

economictimes.indiatimes.com:

Warburg Pincus is closing in on Shriram Housing Finance Ltd (SHFL), having emerged as the frontrunner to acquire the unit of Chennai-based non-banking finance company (NBFC) Shriram Finance, said people in the know. In a closely fought race, Bain Capital is the other serious contender, they said. Binding bids were submitted last week, they added.

Negotiations are ongoing with both seeking to maximise value, “but for the moment, Warburg seems a more aggressive suitor or bidder for the company,” said a person close to the company on condition of anonymity.

To be sure, the sale likely hinges on the matter of valuation. Shriram pegs it at Rs 6,500 crore, inclusive of a control premium, but the offers have been in the Rs 5,300-5,500 crore range.

“We are in a silent period prior to the quarterly earnings board meeting of Shriram Finance,” a Shriram spokesperson told ET. “We cannot comment on these queries, which are speculative.”


Warburg and Bain declined to comment.

Shriram Finance, mainly involved in commercial vehicle financing, owns 84.82% of SHFL, which focuses on affordable homes. San Francisco-based PE Valiant Capital Management owns most of the remaining stake. The company revived plans to sell the company late in 2023, appointing Avendus, Barclays and JM Financial as advisers. This came after protracted negotiations with private equity firms to sell a minority stake of around 15-20% for growth capital did not fructify. Subsequent negotiations with suitors like EQT (formerly Baring EQT) also failed.

ET