Swedish private equity firm EQT announced it will acquire a 100% stake in Indostar Home Finance for USD 210 million. This acquisition will proceed after receiving regulatory approval, facilitated by the BPEA Mid-Market Growth Partnership. Founded in 2017, Indostar Home Finance specializes in providing affordable mortgages in India's tier 2 to tier 4 cities and has supported over 39,000 homeowners. With INR 2,400 crores in AUM and a 32% annual growth rate, the firm operates 130 branches across nine states. EQT plans to enhance Indostar's market reach and digital transformation with a Rs. 500 crores capital injection.
Last week, Swedish based private equity firm EQT announced in a joint statement with Indostar Capital Finance Limited, that it will be acquiring a 100% stake in its subsidiary Indostar Home Finance for USD 210 million (INR 1,750 crores). The statement added that the BPEA Mid-Market Growth Partnership (the MMG fund) would buy the mortgage firm after receiving the required approval from regulatory authorities.
EQT, which was founded in 1994 and is headquartered in Sweden, operates in various countries across the globe. Indostar Home Finance was founded in 2017, and is in the service of offering affordable mortgages in tier 2 to tier 4 cities across the country. They have facilitated over 39,000 homeowners and small business owners since their opening.
Indostar Home Finance currently holds Assets Under Management (AUM) of INR 2,400 crores and over the last 3 years, has consistently generated an annual average growth rate of 32% year-after-year. They currently operate 130 branches in nine states and have an employee base of 1,000 people.
According to the statement, the MMG fund will inject Rs. 500 crores of capital in Indostar Home Finance to support further growth. By capitalizing on their resources, from in-house digitization expertise to market strategy expertise, EQT plans to expand Indostar Home Finance's market reach and drive its digital transformation.
The current housing finance market is currently valued at Rs. 30 lakh crores, and is strengthened by government support, increasing affordability, and urbanization. Despite that, there is still a gaping lack of housing in the country, with India's 12.3% mortgage to GDP ratio being significantly lower than the 60% for developed countries like the United States of America and the United Kingdom.
Ashish Agarwal, Partner in the EQT Private Capital Asia advisory team, expressed the company's excitement about adding Indostar Home Finance to their portfolio and diversifying their portfolio after investing in HDFC Credila, a company specializing in student loans, in the previous year. He added that India's housing finance market holds a lot of potential, with factors such as beneficial government policies and strong asset quality across economic cycles pushing it.
CEO for Indostar Home Finance, Shreejit Menon, said that the company is on the path to success with EQT's contribution and experience and knowledge.
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