Shubham Housing Development Finance Co. Ltd, backed by billionaire Azim Premji’s investment firm PremjiInvest, is planning to raise funds for growth capital and help its early backers exit, two people aware of the development said, requesting anonymity.
The mortgage financier may raise around ₹1,000 crore from new investors. “While the company is looking to raise about ₹700 crore worth primary capital for business expansion, the remaining will be a secondary stake sale by existing private equity (PE) investors,” said the first person.
Existing PE investors Helion Ventures, Elevar Equity Mauritius and Motilal Oswal Financial Services Ltd together hold nearly 43%, while PremjiInvest, with about 45% stake, is the single largest PE investor in the affordable housing finance firm. The remaining stake is held by promoters Sanjay Chaturvedi and Rupa Basu, along with its employees.
“The discussions are at a preliminary stage and all the three PE investors, except PremjiInvest, are looking to offload part of their holdings or exit completely based on the valuation the company gets. The initial expectation is to get a valuation of nearly ₹2,000 crore, but it is yet to be discovered,” the person added.
The sale process is being advised by investment banking firm Nomura, said the second person. “The company plans to use these funds to grow its loan book by 50-60% year over year, as it looks to tap public markets for a listing, two to three years from now.”
While e-mail queries to Shubham Housing, Helion Ventures, Elevar Equity Mauritius and Motilal Oswal remained unanswered, Nomura declined to comment on the development.
Shubham Housing, which was founded in 2010, had raised ₹305 crore in a Series D round led by PremjiInvest in January 2018. In 2014, it had raised ₹122 crore in a round led by Motilal Oswal Private Equity Advisors, besides Helion Advisors, Elevar Equity, Accion Frontier Inclusion Fund and Saama Capital India Advisors. The mortgage lender provides retail home loans to low-income borrowers for purchasing ready-to-move-in property, besides for home improvement, home extension and for the construction of dwelling units on plots owned by the borrowers.
The company operates out of 84 branches across nine states/union territories, including Delhi, Gujarat, Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Maharashtra, Uttarakhand, and Punjab.
For the first six months of fiscal year 2020, the firm reported a net profit of ₹19.58 crore on a managed asset base of ₹1,757 crore, compared to a net profit of ₹17.41 crore on a managed asset base of ₹1,566 crore in the previous fiscal year, according to a 22 January ratings report by Icra Ltd.
