Hero FinCorp Ltd is likely to outbid Blackstone Group and Baring Private Equity (Asia) to acquire Aadhar Housing Finance Ltd, a media report said.
The Economic Times, citing people in the know, said the Hero Group's financial services arm may buy the affordable-homes financier for Rs 2,500-2,700 crore ($351-379 million).
“The final negotiations are on with all three. But unless the two private equity firms (Blackstone Group and Baring Private Equity) offer a 20-25% premium to Hero’s offer, the sale will go in favour of New Delhi-based Hero FinCorp,” said one of the persons.
With the acquisition, Hero FinCorp, which currently provides consumer loans, such as vehicle financing, will enter the housing-finance segment. Aadhar Housing would suffer no ratings downgrade with a Hero Group entity as its buyer.
In December 2018, four parties had submitted bids to acquire a controlling stake in Aadhar Housing Finance, according to a report in The Times of India.
Citing people aware of the development, the report said that the bidders were Baring Private Equity Asia; a consortium of ChrysCapital and Hero FinCorp; Delhi-based non-banking financial company DMI Finance; and a grouping of Indostar Capital and private equity firm Everstone.
Aadhar Housing Finance was being valued at more than Rs 2,400 crore (around $330 million), the report had said.
In May, VCCircle had reported that Aadhar was firming up plans for an initial public offering.
Aadhar, a subsidiary of financial services group Wadhawan Global Capital, provides home financing to lower- and middle-income segments. It counts International Finance Corporation (IFC) as one of its investors.
Wadhawan and Dewan Housing Finance Ltd (DHFL) own a controlling stake in Aadhar. Wadhawan Global Capital in turn owns 38% of DHFL and is the controlling lever for the group's financial businesses.