IndoStar Capital sells subsidiary IndoStar home finance to EQT for ₹1,750cr

IndoStar Capital will trade its home finance subsidiary to EQT for INR 1,750 crore. The firm will concentrate on core development in vehicle finance and small business loans, with other investments planned to increase operations.

Transaction Overview

IndoStar Capital Finance Limited has announced the sale of its subsidiary, IndoStar Home Finance Private Limited (IHFPL), to Witkopeend BV, an Amsterdam-based affiliate of global private equity investor BPEA EQT Mid-Market Growth Partnership, for ₹1,750 crore on a fully diluted basis.

The deal is subject to customary conditions, including regulatory approval from the Reserve Bank of India and consent from lenders and shareholders.

Investment for Growth

Following the transaction’s closure, EQT plans to inject ₹500 crore into IHFPL. This capital infusion is expected to enhance IndoStar’s growth trajectory, particularly in its core sectors of vehicle finance and small business loans.

Strategic Importance

Bobby Parikh, chairman of IndoStar, emphasized the strategic significance of the sale, stating, “We are confident that under EQT’s stewardship, IndoStar Home Finance will continue to thrive.” This move allows IndoStar to refocus on its primary business areas while benefiting from EQT’s expertise.

CEO’s Perspective

Shreejit Menon, CEO of IHFPL, expressed enthusiasm about the partnership, highlighting EQT’s alignment with their mission to deliver affordable housing finance solutions across India. This collaboration aims to capitalize on the growing demand in the housing sector.

EQT’s Insight

EQT’s Ashish Agrawal pointed out that retail lending represents a crucial investment theme for the firm within the Indian financial services landscape, noting strong demand and supportive government policies in the affordable housing market.

Hemant Sharma from EQT praised IHFPL’s established market position and its potential for growth, particularly through digital transformation and national expansion.

Advisory Team

The transaction was facilitated by financial advisors Daiwa Corporate Advisory India and Ambit Private Limited, with legal counsel provided by Cyril Amarchand Mangaldas. Ernst & Young LLP conducted financial and tax due diligence, while Samvad Partners also played a role in the process.