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IndoStar Capital Finance shares surged over 13 per cent in early trade on September 20, after the NBFC sold its subsidiary IndoStar Home Finance for a total consideration of Rs 1,750 crore.
However, the stock soon pared gains and at around 9:49 AM was up 4.08 per cent at Rs 313.65 per share on the BSE. In comparison, the BSE Sensex traded at 83,322.08, around 137 points higher around the same time.
The company, in an exchange filing, said, “IndoStar Capital Finance Limited (IndoStar) today announced that its Board has approved the sale of its subsidiary, IndoStar Home Finance Private Limited (IHFPL) to WITKOPEEND B.V.”.
WITKOPEEND B.V., an affiliate of BPEA EQT Mid-Market Growth Partnership (EQT), a global private equity investor, will buy IHFPL for 1,750 crore on a fully diluted basis, the exchange filing added.
Several other approvals, including a receipt from the Reserve Bank of India (RBI) and consents from lenders and shareholders, have yet to be received for the transaction.
Further, private equity firm EQT plans to invest Rs 500 crore into IHFPL upon or shortly after the closing of this transaction, and the board of IHFPL has granted approval for such infusion, the company added.
The transaction will provide IndoStar with capital for accelerated growth and value creation in its core verticals of Vehicle Finance and Small Business Loans.
“Retail lending is a key investment theme for EQT within financial services in India. Building on our investment in the education finance sector through HDFC Credila last year, we are thrilled to welcome Indostar Home Finance to our portfolio. India’s affordable housing finance sector represents a long-term growth opportunity supported by secular demand drivers, favorable government policies, and resilient asset quality across economic cycles,” said Ashish Agrawal, Partner in the EQT Private Capital Asia advisory team.
IndoStar is a non-banking finance company (NBFC) registered with the RBI as a systemically important non-deposit-taking company. Through its subsidiary, IndoStar Home Finance Private Limited, IndoStar provides used and new commercial vehicle financing and affordable home finance.
In the past one year, shares of Indostar Capital have gained 74.09, compared to the BSE Sensex’s rise of 24.5 per cent during the same period.
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