Private equity giants, Baring Private Equity Asia (BPEA) and ChrysCapital are investing in Indian mortgage lender HDFC’s education finance branch, HDFC Credila Financial Services. They will purchase a 90% stake worth ₹9,036 crore, setting a record for India’s largest private equity buyout in the financial services sector.
What Happened? Per a Reuters report, the investors evaluated HDFC Credila at a pre-money valuation of ₹10,350 crore and plan to invest an additional ₹2,000 crore. BPEA, one of Asia’s major private equity firms, manages over ₹1.8 lakh crore ($22 billion).
Similarly, ChrysCapital is a leading local private equity firm in India. Both companies are placing their bets on India’s growing middle class and the rising trend of students taking loans to study overseas.
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Banking on a promising sector: The number of Indian students studying abroad spiked by 68% to 750,365 in 2022. Reports suggest they will spend between ₹6.16 and ₹6.6 lakh crore ($75-80 billion) on international education in 2024. According to the Reserve Bank of India, Indian banks’ education loans outstanding for fiscal 2023 climbed 18% year-on-year.
The deal occurs ahead of HDFC’s proposed ₹3.2 lakh crore ($40 billion) merger with HDFC Bank, due for completion next month. HDFC will hold a 9.99% stake in HDFC Credila following the sale, complying with the RBI’s requirement to reduce its shareholding to 10% within two years of the merger. Since 2006, HDFC Credila has provided loans to over 1.24 lakh customers.
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