Shriram Finance Limited has decided to sell its entire stake in its subsidiary, Shriram Housing Finance (SHFL), to Warburg Pincus.

What Happened: Shriram Finance’s board gave the green light to the disinvestment proposal and the draft of the share purchase agreement in a meeting. Warburg Pincus said it will acquire the stake through its affiliate Mango Crest Investment from all the sellers involved.

As a part of this transaction, Mauritius-based Valiant will also completely divest its equity stake to Warburg Pincus.

The deal, worth ₹4,630 crore, is contingent on regulatory approvals and other standard conditions. Once the transaction is finalised, SHFL will no longer be a subsidiary of Shriram Finance.

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Continuing Mangement And Growth: SHFL’s current management team, under the leadership of Ravi Subramanian, will continue to steer the business. The transaction is slated to be completed by February 7, 2025.

“We believe that at this cusp of growth, Shriram Housing Finance is set to unlock greater value as it empowers underserved millions to own homes. This transaction aims to maximize value creation for both SFL and SHFL, as both companies independently fulfill their respective long-term vision,” said Umesh Revankar, executive vice-chairman of Shriram Finance.

Shriram Finance is a non-banking financial company (NBFC) in India, serving over 84 lakh customers across the country. Its subsidiary, SHFL, is a key player in the affordable housing segment. The divestment of SHFL to Warburg Pincus marks a significant shift in Shriram Finance’s business strategy, potentially allowing the company to focus on its core operations and enhance its financial performance.

For Warburg Pincus, this acquisition expands its footprint in the Indian financial sector, particularly in the affordable housing market.

Warburg Pincus had previously been reported to be the frontrunner to acquire the business in a bidding war with Bain Capital.

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