Shriram Finance shares rally 5% after company announces sale of housing finance unit to Warburg Pincus

In a filing to the stock exchanges, Shriram Finance said that its board of directors at the meeting held on May 13 approved the sale of its housing finance subsidiary Shriram Housing Finance Ltd (SHFL) to global investor Warburg Pincus.

Warburg Pincus will acquire the stake through its affiliate Mango Crest Investment Ltd from all the sellers.

The proposed transaction is valued at ₹4,630 crore for equity and convertible instruments of SHFL and is subject to regulatory approvals.

Shriram Finance holds a controlling stake in SHFL, while private equity firm Valiant Partners LP, Mauritius, holds the remaining ownership. As a part of this transaction, Valiant will also completely divest its equity stake to Warburg Pincus.

Shriram Finance said that the expected time of completion of the transaction is February 7, 2025.

Notably, during the financial year ended March 2024, SHFL recorded turnover of ₹1,429.56 crore, contributing 3.93% to Shriram Finance’s total revenue.

Commenting on the development, Shriram Finance MD and CEO Y.S. Chakravarti said, “We believe that this transaction is in the best interest of SHFL shareholders towards greater value generation and comes at an opportune time for us as well. Shriram Finance Ltd will continue to focus on growth led by the short to medium-tenor consumer finance business, while Shriram Housing Finance will now chart out its differentiated path.”

On Tuesday, shares of Shriram Finance rose as much as 5% to hit an intraday high of ₹2,417.85 apiece on the National Stock Exchange of India (NSE), ending the six consecutive sessions of decline. The stock had lost a cumulative 11% during these six sessions. Year-to-date, however, the stock is up 14% in 2024.

Shares of Shriram Finance were trading 2.09% higher at ₹2,350 apiece on the NSE at 11 am.