In what could be the largest deal in the listed affordable housing finance space, Warburg has initiated conversations with banks and NBFCs to exit its stake in Home First Finance.

The New York-headquartered private equity major has reached out to IndusInd Bank, Shriram Housing, Vaastu Housing Finance, RBL Bank and YES Bank for a possible transaction. Shares of Home First Finance were listed in bourses in February 2021 and Warburg — which was roped in as a pre-IPO investor — holds 28.73 per cent stake in the company. Based on Wednesday’s closing, Warburg’s stake in the company totals to ₹2,170 crore.

‘Early stage conversations’

Home First is among the top five affordable housing lenders with a loan book of ₹5,832 crore as on June 30. “There’s a lot of interest in acquiring Warburg’s stake so far, but the price quoted now is very steep,” said a person aware of the matter.

While Warburg’s asking rate is 6X price to book, Home First’s shares trade at a little over 4X valuations. “Conversations are at an early stage and if valuations become more realistic, we would conclude the transaction by the end of this fiscal,” said a senior executive of a bank who didn’t want to be named.

Home First was founded by former Citibank bigwigs — Jerry Rao, PS Jayakumar and Manoj Viswanathan — in 2010. While Rao is said to have cashed out of the company, Jayakumar and Viswanathan collectively hold less than 4 per cent stake. Viswanath is the MD & CEO of the company.

BusinessLine reached out to Home First for comments, but the company said the respective investors should be contacted. Warburg did not offer any comment. Sources indicate that if Warburg closes a deal at attractive valuations, True North may also join the transaction. But when contacted, True North said that they are not placing shares of Home First on the block.

True North (earlier known as India Value Fund Advisors) and GIC are the promoters of Home First and hold 20.19 per cent and 13.39 per cent stake, respectively. They have been invested in the company since 2017, while Bessemer Capital, a series A investor in Home First holds 7.77 stake.