Shares of Shriram Finance Surge 5% Following Sale of Housing Finance Division to Warburg Pincus for Rs 4,630 Crore

Shares of Shriram Finance, a financial services firm, rose over 5% on Tuesday after the company announced the sale of its housing finance division to private equity major Warburg Pincus for Rs 4,630 crore. The sale will allow Shriram Finance to focus on vehicle finance and small business lending. The stock climbed 5.13% to Rs 2,419 on the BSE, while on the NSE it rose 5% to Rs 2,417.85 apiece.

Shriram Housing Finance (SHF) has grown at a compounded annual rate of over 50%, and Warburg Pincus has committed to investing another Rs 1,000 crore in the company after the deal is closed. The deal is expected to close by the end of this fiscal year, in March 2025.

Shriram Finance owns 83.8% of SHF, while PE player Valiant owns 14.8%, and the remaining 1.4% is owned by employees. Under the agreement, Mango Crest Investment Ltd, an affiliate of Warburg Pincus, will acquire SHF from all the sellers.

Shriram’s executive vice chairman, Umesh Revankar, said that the Shriram group wishes to focus on its core business of small business and vehicle lending rather than pumping capital into SHF. He added that Shriram Finance has made an internal rate of return of 22% on the capital deployed in SHF.

Shriram Finance is one of India’s leading Non-Banking Financial Companies (NBFCs), serving over 84 lakh customers across India by offering commercial vehicle loans, two-wheeler loans, and Micro, Small and Medium Enterprises (MSME) financing.