Poonawalla Fincorp to sell entire stake in housing arm to TPG for Rs3,900 crore

“The transaction will maximize the shareholders’ value in the long term as Poonawalla Fincorp focusses on building a tech-led and digital-first financial services company, with leadership in consumer and micro, small and medium enterprise (MSME) financing,” the Cyrus Poonawalla group promoted non-bank lender said in a regulatory filing.  

The housing finance subsidiary operates in the affordable housing market. As of 31 March, its business comprised of over 46,000 customers and average ticket size was ₹11 lakh.

Poonawalla Fincorp said it will continue to work towards achieving its stated Vision 2025 at a standalone level with focus on growth, asset quality and profitability. It said that value unlocking of the housing finance subsidiary was one of the stated objectives in the company’s Vision 2025 statement and in line with that, company started looking at part dilution and price discovery.  

“The company received tremendous response with proposals including those for a full stake buyout. Post an exhaustive strategic review of the proposals, the board decided that complete stake sale would be in the best interest of both the entities and all stakeholders considering the different customer segments, geographies, and distribution model,” it said. 

This transaction, it said, will help focus on maximizing value creation by optimizing resource allocation and increasing management focus on their respective business needs.  

“With the rapidly growing digital eco-system, Poonawalla Fincorp sees tremendous growth opportunities in its current and proposed line of businesses. It will continue to build a strong retail franchise in consumer and MSME financing,” the statement said.  

The company, along with its subsidiary, has assets under management (AUM) of ₹18,560 crore and employs over 4,000 people. Its financial services offerings include pre-owned car finance, personal loans, loan to professionals, business loans, small and medium enterprise loan against property, supply chain finance, medical equipment, consumer loans and affordable home loans. 

“Financial services business is of strategic importance to us, and we stay fully committed towards creating value for all our stakeholders and building Poonawalla Fincorp into a new age financial services player of choice. As a global leading investment firm, TPGs experience in building and supporting leading financial services companies will add greater value to Poonawalla Housing,” said Adar Poonawalla, chairman, Poonawalla Fincorp. 

Going ahead, the company said it will focus on growth in the chosen segments leveraging technology and digital capabilities. The company aspires to achieve assets under management growth of 35-40% year-on-year (y-o-y) over the next three years. 

“Considering the company’s large capital base, it is well poised to explore deep investments in technology and analytics through both organic and inorganic routes,” the statement said.