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.
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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