Centrum Capital is actively exploring the sale of its 74 percent stake in Centrum Housing Finance. RBI's directives after Centrum's acquisition of PMC Bank in 2021 are influencing this decision. The potential valuation of the housing finance business is around Rs 1,500 crore. Private equity investor Morgan Stanley PE Asia holds about 25 percent of the venture. While the deal is in its early stages, the possibility of merging the housing finance business with Unity Small Finance Bank is being considered. As of March 2023, Centrum Housing Finance's loan portfolio stood at Rs 1,140 crore, indicating robust growth.
Centrum Capital, under the leadership of Jaspal Bindra in the financial services sector, is currently exploring the possibility of divesting its stake in Centrum Housing Finance. Sources with knowledge of the matter reported this information, as per ET. Centrum Group, headquartered in Mumbai, presently holds a substantial 74 percent stake in Centrum Housing Finance. Meanwhile, private equity investor Morgan Stanley PE Asia maintains around 25 percent ownership, having injected Rs 190 crore into the business back in 2020.
One of the insiders familiar with the situation revealed that Centrum is actively formulating a strategy to explore the sale of its stake in the housing finance business. They anticipate the launch of a formal initiative in the near future. The potential valuation of this housing finance venture is estimated at approximately Rs 1,500 crore, according to the same source. Directives issued by the Reserve Bank of India (RBI) drive this stake sale initiative. The acquisition of PMC Bank by the Centrum Group and the BharatPe consortium in 2021, leading to its rebranding as Unity Small Finance Bank, prompted these directives.
The RBI mandated that if Centrum were to retain a majority stake in the housing finance sector, the bank would be prohibited from engaging in mortgage financing activities. Sources close to the situation disclosed that the transaction is still in its early stages, with the finer details of the deal currently under active consideration. It remains a plausible scenario that Centrum may opt to retain a minority stake in the venture. The Centrum Group has previously undertaken consolidation efforts within its lending businesses, such as the merger of MSME and microfinance lending segments into Unity Small Finance Bank.
One of the sources involved commented that the option of merging the housing finance business with the bank is also being explored. The final decision will be contingent on the valuation that the business commands. On March 31, 2023, Centrum Housing Finance possessed a loan portfolio valued at Rs 1,140 crore. Care Ratings reported a remarkable year-on-year increase of 96 percent compared to the previous year's Rs 581 crore. The evolving narrative surrounding Centrum's housing finance stake presents an intriguing story to watch for enthusiasts of the financial industry. The ultimate decisions made in this regard could potentially set new precedents within the broader market.
Centrum, a dynamic financial services group in India, has been serving individuals and institutions for 25 years. They offer investment banking, brokering, wealth management, affordable housing finance in Tier 2 and Tier 3 cities, and retail broking. Its asset management covers private debt and venture capital. With recent integration into Unity Small Finance Bank, its MSME loans and microfinance services are poised for significant growth. The leadership team, with a strong track record, operates in 140+ cities across India and has an international presence in Singapore.
Advertisement
Facebook
Whatsapp
