The Swedish global investment organization EQT announced that its buyout fund BPEA Mid-Market Growth Partnership (MMG fund) has agreed to acquire a 100% stake in Indostar Home Finance, a wholly owned subsidiary of Indostar Capital Finance, for 17.5 billion rupees (US$210 million).
Under the deal, announced on September 20, the MMG fund will invest 5 billion rupees of primary capital in Indostar Home Finance to support its next phase of growth. EQT aims to expand the company's geographic footprint and accelerate its digital transformation journey by leveraging EQT's in-house digitalization expertise, network of seasoned industry advisers, and expertise in go-to-market strategies.
Founded in 2017, Indostar Home Finance provides affordable mortgages to retail customers in tier 2 to tier 4 cities in India and has supported over 39,000 low-income homeowners and small businesses. The company has rapidly scaled to more than 24 billion rupees in assets under management, achieving a 32% compounded annual growth in the last three years. Indostar Home Finance has a network of more than 130 branches spread across nine states and employs over 1,000 people.
The Indian housing finance market currently stands at more than 30 trillion rupees, according to the Indian analytical company CRISIL. The segment has recorded strong growth driven by government support, rising affordability and urbanization. However, there remains a significant shortage of housing in the country, with India’s mortgage-to-GDP ratio at 12.3%, compared to more than 60% for developed countries like the United States and the United Kingdom.
In making the acquisition, Ashish Agrawal, partner in the EQT Private Capital Asia advisory team, says retail lending is a key investment theme for EQT within financial services in India. “Building on our investment in the education finance sector through HDFC Credila last year, we are thrilled to welcome Indostar Home Finance to our portfolio,” he points out. “India’s affordable housing finance sector represents a long-term growth opportunity supported by secular demand drivers, favourable government policies and resilient asset quality across economic cycles.”
Hemant Sharma, managing director in the EQT Private Capital Asia advisory team, adds: “We see significant potential to expand Indostar's presence across India and drive its digital transformation. EQT looks forward to supporting the company in its next phase of growth.”
Indostar Home Finance CEO Shreejit Menon describes the transaction as a key milestone for his company and the partnership with EQT will significantly help advance its mission of delivering affordable housing finance solutions across India. “With EQT's support and global expertise, we are well-positioned for accelerated growth and success,” he adds.
The transaction is subject to customary regulatory approvals.
