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Among the 12 to 14 lenders to invest in Housing Development Finance Corp.’s Credila Education signature are sovereign wealth funds, private equity firms and investors, available as two people know the development.
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Abu Dhabi Investment Authority (ADIA), GIC Singapore, Blackstone, BPEA EQT (formerly Baring Private Equity Asia) and Warburg Pincus are some of the applicants who have expressed interest in HDFC Credila Financial Services Ltd (Credila) to acquire a stake. people said on condition of anonymity.
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Among the lenders, IndusInd Bank and Kotak Mahindra Bank are bidding for Credila, one of India’s leading education loan providers, one of the people said, adding that Tata Capital Also interested but may be out of the entry due to equity. due to excessive processing.
The steady increase in the number of Indians pursuing higher education, coupled with the rising cost of education both in India and abroad, has led to a steady increase in the demand for loans. education in the country.
Warburg Pincus already has a majority stake in leading education loan provider Avanse Financial Services Ltd, while Blackstone has a majority stake in lender Aadhar Housing Finance. BPEA EQT has a small stake in RBL Bank, while GIC and ADIA have investments in several Indian lenders. GIC also has stake in HDFC itself.
Spokespersons for Blackstone and ADIA declined to comment, while email requests to spokespersons for BPEA EQT, Warburg Pincus, GIC, Tata Capital, Kotak, IndusInd Bank and HDFC went unanswered. HDFC has approached Jefferies Financial Group Inc to manage the sale of Credila and may seek as much as $1 billion (about Rs 8,100 crore), one of the people said.
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Last week, HDFC CEO Keki Mistry said that the company has received several bids for its stake in Credila, without naming the bidders.
The lender will reduce its stake in HDFC Credila to 10% over the next two years and stop acquiring new customers to tie up with HDFC Bank, as per Reserve Bank of India (RBI) guidelines.
“A lot of people are calling and donating, but we’re still putting everything together,” Mistry said. On April 25, Mint reported that HDFC will approach the RBI to let HDFC Credila continue to register customers until it finds customers. the buyer
A year later, DSP Merrill Lynch bought 40% of the lender. HDFC acquired DSP Merrill Lynch’s stake in Credila in 2009, when Bank of America bought DSP Merrill Lynch.
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Bahara Brothers left HDFC Credila in December 2019 and HDFC acquired 9.12% for Rs 395 crore ($56 million), taking HDFC Credila to $614 million (about Rs 4,331 crore). .
As of March 31, Credila had a loan portfolio of Rs 15,238 crore. Net profit for the year ended March 31 rose to ₹ 276 million from ₹ 206 million in the fiscal year ended March 31. Its total non-performing assets were 0.17% as on March 31, compared to 0.24% as of December 31.
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India’s largest mortgage lender, Housing Development Finance Corp (HDFC), has appointed Jefferies Financial Group to manage the sale of HDFC Credila Financial Services. HDFC may seek a valuation of up to $1 billion for the unit as it seeks to complete regulatory formalities before merging with HDFC Bank. According to unnamed sources, the Reserve Bank of India has given a two-year start to reduce its stake in Credila to 10%, and the sales force is one of the largest markets managed by Jefferies.
Housing Development Finance Corp., an Indian lender, has appointed Jefferies Financial Group Inc. to manage sales of the student loan division, people familiar with the matter said.
HDFC may sell HDFC Credila Financial Services Ltd. $1 billion as part of the lender’s move to meet regulatory requirements for its merger with HDFC Bank Ltd. They said Jefferies has begun preliminary discussions with interested parties and the sale process could begin soon.
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The Reserve Bank of India has given the merged entity two years to reduce its stake in Credila to 10%, HDFC Bank said in an equity filing last month. The law firm is one of Jefferies’ most regulated firms in the country, and will support the firm’s strategic business advisory role in the local market.
No decision has been made about the investigation yet, the people said. Spokespeople for HDFC and Jefferies declined to comment.
17-year-old HDFC Credila is India’s first mortgage loan company, data on its website shows. The privately held company had assets of 142.3 billion rupees ($1.7 billion) as of Dec. 31, according to its website.
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To read the full story, subscribe to ET PrimeSign to read the full story. You get this original article as a free gift Mumbai, April 6 Ahead of the proposed merger, HDFC is reviewing its position with all its non-banking subsidiaries. 8,491 crore education loan business under HDFC Credila Financial Services is likely to have a financing partner in the next six months.
Currently, HDFC’s 100% housing finance facility is expected to take off 15-25% of the business and acquire the education loan business to the tune of Rs 3,000 crore.
It is said that the involvement of the investor in HDFC Credila is a preparatory work for the comfort of management and partners of HDFC before the merger.
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Similar stories HDFC-HDFC Bank. The effective date appears only after all approvals. May take 15-18 months; from the effective date, all outstanding debts, permanent debts, loans, loans of HDFC will be transferred to HDFC Bank.
“Although the plan is to list HDFC Credila in the next few years, bringing in an investor at this time will enhance the business and strengthen the valuation ahead of the IPO. ,” said a person with direct knowledge of the matter. Also, in the four years to ’20, HDFC continues to invest in the company (380 crore), the latest being Rs 200 crore in FY20. Although it is not a big infusion for HDFC, after becoming a bank, RBI may not approve regular cash infusion into its branches. Therefore, finding an investor ahead of the merger will increase the importance of HDFC Credila’s equity fund in the near future.
HDFC Credila was established in 2006 in partnership with DSP Merrill Lynch Capital. In 2009, HDFC acquired 41% of DSP Merrill Lynch in the company and later in 2019, the remaining 9.12% was acquired from the original promoters Ajay Bohora and Anil Bohora for Rs 395 crore, which they have since owned: via HDFC . Too much. As an education loan specialist, HDFC Credila is among the lenders with a return on non-performing assets of 0.5% till December 31, 2021.
Meanwhile, the big house fund is also reviewing its position in the general insurance business. HDFC and its foreign partner ERGO, which hold 51 and 49 per cent stake respectively in HDFC ERGO General Insurance, will meet next month to decide the direction for the transaction. While HDFC ERGO’s IPO has been in the works for some time, by opening up to 74% FDI in insurance business, ERGO can:
