Mumbai, July 4: IndoStar Capital Finance is all set to acquire a majority stake in ICICI Home Finance. The deal, if successfully signed between the two, is expected to be worth over a whopping Rs 3,000 crores and will result in IndoStar and its parent private equity firm Everstone Capital jointly owning two-thirds of the stake in ICICI Home Finance.
While the ICICI group will continue to engage in mortgages as part of its banking business, the bank’s home finance subsidiary had already been put up for sale in 2015. The ICICI group had decided that the subsidiary formed part of its non-core business.
Despite the sale to non-banking finance company (NBFC), IndoStar Capital, ICICI group will continue to hold a one-third stake in the housing finance subsidiary. According to a report in the Business Standard, an investment banker familiar with the sale process is reported to have said, “At Rs 3,000 crore, ICICI Home Finance is valued at two times its book value for the last financial.”
Another person familiar with the deal is also quoted as having said, “While IndoStar is a strategic buyer, which will own and run the operations, Everstone is backing it as a financial investor. The transaction with regulatory approvals is expected to be completed in the next three months.” ICICI Home Finance managed to earn a revenue of Rs 1,052.8 crore in the last financial year. Of the revenues, the firm’s net profit was Rs 183.2 crore.
The report also quotes an ICICI bank spokesperson’s statement in response to the possible sale as, “ICICI Bank has been receiving proposals from interested parties regarding its stake in ICICI Home Finance Company. However, no proposal has been taken to the Board of Directors of the Bank for consideration.”
Previous attempts at concluding a sale of ICICI Home Finance were not successful despite the sustained efforts of the bank. The earlier prospective buyers had included TPG Capital and also a partnership of India Value Fund Advisors and Baring Asia.