Housing finance company Sitara, operated by Sewa Grih Rin Ltd, has secured Rs 680 crore ($81 million) in an equity round of funding from private equity firm Arpwood Partners.
Arpwood Partners, an investment firm floated by former Carlyle India head Rajeev Gupta, has picked up majority stake in Sitara in this transaction, as per a media statement.
Existing investors including Abler Nordic, Oikocredit, RNT Associates (sponsored by Ratan Tata), HDFC Bank, HDFC Life Insurance, Women’s World Banking Asset Management and Omidyar Network, also have infused another Rs 25 crore in the company.
Global investment bank DC Advisory India acted as exclusive adviser for the transaction.
"The capital infusion by Arpwood Partners will help enhance the capacity of the company to support women in realising their dream of owning a house of their own. With this infusion, we will redouble our efforts to touch over 500,000 lives in the next five years," said Renana Jhabvala, chairwoman at Sewa Grih Rin Limited (Sitara).
Founded in 2015, Sitara specialises in delivering financial solutions to underprivileged and low-income households, with a particular focus on women working in the informal sector.
It provides loans ranging from Rs 50,000-30 lakh for house construction, extension and purchase and renovation. Sitara operates through a network of 75 branches in nine states including Delhi, Rajasthan, Madhya Pradesh, Uttar Pradesh, Bihar, Maharashtra, Gujarat and Haryana. It claims to have an AUM of Rs 1,200 crore with over 25,000 customers.
“We believe that lending to self-employed customers with informal incomes is a structurally attractive opportunity. We will work with current shareholders to grow the franchise profitably, expand the distribution network and invest in the team, an Arpwood Partners spokesperson said.
The firm had last year raised Rs 120 crore in debt funding from British International Investment, the UK's development finance institution.
This is not the first financial services bet struck by Arpwood Partners, which also runs a separate boutique investment banking vertical. It has in the past backed Suryoday Small Finance Bank. Arpwood also counts Karvy Financial Services and SBFC Finance Ltd, among its portfolio firms, as per VCCEdge, the data intelligence platform of VCCircle.