Mortgage lender HDFC Ltd has recently signed an agreement with a consortium led by private equity firms BPEA EQT and ChrysCapital, for the sale of a 90% stake in its education loan affiliate, HDFC Credila. According to a recent filing at the stock exchange, the deal is valued at approximately Rs 9,060 crore. However, the transaction is subject to approval from several regulatory bodies such as the Competition Commission of India (CCI) and the Reserve Bank of India (RBI).
Once the deal is finalized, HDFC Credila will no longer be a subsidiary of HDFC Ltd. The company will hold less than 10% of the total issued and paid-up share capital of HDFC Credila. The move is expected to provide HDFC Credila with more opportunities to expand its business in the education loan sector.
The consortium’s acquisition of the majority stake is a strategic move that will help them to widen their presence in the education lending market. HDFC Credila has a good market share and specializes in providing loans for higher education, vocational courses and post-graduation studies.
The transaction marks a significant milestone for HDFC Ltd, which has been working on ways to reduce its subsidiary portfolio, while continuing to focus on the core business of housing finance. The sale of HDFC Credila will help the company to streamline its operations and allocate resources more effectively.
The announcement comes at a time when the education lending market is expanding at an unprecedented pace, with a growing number of students looking for ways to finance their education. The sale of HDFC Credila is expected to provide the company with fresh capital to invest in the development of new products and services to meet the evolving demands of the market.
Overall, the sale of HDFC Credila is a win-win situation for both HDFC Ltd and the BPEA EQT-led consortium. While HDFC Ltd will be able to focus on its core business, the consortium will be able to expand its footprint in the education lending market. The deal is expected to be completed soon, pending the necessary regulatory approvals.
