PE firm EQT acquires Indostar Home Finance for Rs 1,750 Cr

Private equity firm EQT has agreed to acquire a 100% stake in Indostar Home Finance, a wholly-owned subsidiary of Indostar Capital Finance Limited, for Rs 1,750 crore ($210 million).

The Sweden-based firm announced that the BPEA Mid-Market Growth Partnership (or the MMG fund) would acquire the mortgage firm subject to regulatory approvals, a joint statement issued on Friday said.

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 Rs 2,400 crore 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 MMG fund will invest Rs 500 crore of primary capital in Indostar Home Finance to support its next phase of growth, it said.

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 advisors, and expertise in go-to-market strategies, it said.

According to an estimate, the housing finance market currently stands at more than Rs 30 lakh crore. The affordable 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 USA and UK.

Ashish Agrawal, Partner in the EQT Private Capital Asia advisory team, said, "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.

"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," he said.

"With EQT's support and global expertise, we are well-positioned for accelerated growth and success," Shreejit Menon, CEO of Indostar Home Finance, said.