Poonawalla Fincorp to sell its housing subsidiary to TPG for ₹3,900 crore

Poonawalla Fincorp Ltd. has approved the sale of its housing subsidiary Poonawalla Housing Finance Ltd. to Perseus SG Pte. Ltd., an entity affiliated with TPG, for ₹3,900 crore. The deal will help focus on maximising value creation by optimising resource allocation and increasing management focus on their respective business needs, the non-banking financial company says in a regulatory filing

"The transaction will maximise the shareholders' value in the long term as Poonawalla Fincorp focusses on building a tech-led and digital-first financial services company, with leadership in consumer & MSME financing," as per the exchange filing.

The value unlocking of the housing finance subsidiary was one of the stated objectives in the company’s Vision 2025 statement. In line with that, the company started the process by looking at part dilution and price discovery.

"The company received tremendous response with proposals including those for a full stake buyout. Post an exhaustive strategic review of the proposals, the board decided that complete stake sale would be in the best interest of both the entities and all stakeholders considering the different customer segments, geographies, and distribution model," the filing says.

Amid the rapidly growing digital ecosystem, Poonawalla Fincorp says it sees tremendous growth opportunities in its current and proposed line of businesses.

The digitisation further complements innovation in products, customer experience and engagement, the non-bank lender says, adding it will continue to build a strong retail franchise in consumer and MSME financing.

The NBFC aspires to achieve AUM growth of 35-40% year-on-year over the next three years while maintaining its net non-performing assets (NPA) below 1%.

"Poonawalla Fincorp will continue to focus on its growth coming from tech-led businesses and a branch-lite model while Poonawalla Housing will follow its own differentiated path as a completely independent business. As a global leading investment firm, TPGs experience in building and supporting leading financial services companies will add greater value to Poonawalla Housing," says Adar Poonawalla, chairman, Poonawalla Fincorp.

The non-bank lender claims it has one of the lowest costs of borrowings amongst its peers.

"Our chosen segments of consumer and MSME will continue to have healthy growth and we are confident that we will further accelerate our growth story by bringing innovative customer-centric solutions," says Abhay Bhutada, managing director, Poonawalla Fincorp.