Nearly six months after receiving board approval for a fundraise, there could be a transaction in sight at Poonawalla Housing Finance, formerly Magma Housing Finance. Sources say at least six bidders have expressed interest, with ChrysCapital and TPG at the forefront to pick up significant stakes in the company. “While it’s likely that a joint bid may be made by TPG and ChrysCapital, the structure is still being worked out and may change if valuations aren’t acceptable,” said a person aware of the matter.
Ontario Teachers’ Pension Fund, Greater Pacific Capital, and TA Associates have also shown interest in Poonawalla Housing, a 100 per cent subsidiary of Poonawalla Fincorp.
First major deal
The transaction, which is the first major deal from the Poonawalla stable since it took over Magma Fincorp last year, is proving to be a tricky one, say the persons involved in the deal. “It was initially envisaged to be only a stake sale for 15 per cent shareholding, but that didn’t evoke enough interest from large investors whom Poonwalla was keen to rope in for the deal,” said a highly placed source. Post this feedback, the promoters were okay with a full exit from its housing finance arm. “However, now valuations are playing spoilsport,” said the source. Poonwalla Housing’s net worth was around ₹1,100 crore as of September 30, 2022, and it is targeting valuations of ₹3,000-3,500 crore.
The initial valuations that Poonwalla was quoting were said to be around 3.5–4x price to book. “Now they are willing to close the deal at 3x, but those interested in a full takeover are offering valuations of around 2.5x price to book,” he added. It is gathered that ChrysCapital has made an independent bid for ₹500 crore to pick up 13 per cent stake in the company, and if Poonawalla Fincorp decides to retain its majority stake, it may seal a deal with the home-bound private equity major in the next few weeks.
In May, the board of Poonawalla Housing Finance approved ₹1,000 crore of preferential issue of share. An email sent seeking confirmation of the ongoing transaction remained unanswered until press time.