Partners Group, Kedaara to buy unit from India's Au Financiers
A joint venture between Kedaara Capital and Partners Group has agreed to buy Au Housing, the mortgage arm of Indian non-banking finance company (NBFC) Au Financiers.
Financial details of the deal have not been disclosed, but a report in The Economic Times, which cites Au Financiers Managing Director Sanjay Agarwal, put the value of the purchase at INR9.5 billion ($139 million). The sale is expected to close in April, subject to approval from India's housing finance regulator.
The company plans to use the proceeds to support its planned small finance bank. Au Financiers was one of 10 NBFCs to receive approval in principle to open a small finance bank from the Reserve Bank of India last year. This license is meant to help provide financial services to the country's large unbanked population and bring them into the formal banking system.
Au still must dilute its level of foreign ownership to 49% in order to receive final approval to open the bank; currently 62% of the company is held by foreign investors, including Warburg Pincus, ChrysCapital and the International Finance Corporation (IFC). The three firms have participated in several rounds of funding for the company, including a $21 million investment in 2014 and a separate $25 million commitment by IFC the same year.
Kedaara is also an existing investor in Au Financiers, having bought a 10% stake in the company in December 2014 for an undisclosed amount. The firm is investing out of Kedaara Capital I, which closed in 2013 at $540 million.
Founded in 2011, Au Housing aims to serve the housing needs of people in rural and semi-urban areas of India through affordable housing loans. According to Au Financiers' latest annual report, Au Housing reported profit after tax of INR191 million for the year ended March 2015, up from INR72 million the year before. Over the same period, net profit for the parent company grew from INR920 million to INR1.4 billion, with revenue rising from INR6.2 billion to INR7.4 billion.
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