Anil Ambani-controlled Reliance Capital Ltd has decided to list its home finance arm to bring increased management focus and expand the business.
As per the proposal, a 49% stake in Reliance Home Finance Ltd will be allotted to shareholders of Reliance Capital, the company said in a statement. Reliance Capital shareholders will get one share for free in Reliance Home Finance for every one share held in the parent.
Reliance Capital will hold a 51% stake in Reliance Home Finance. The proposal is subject to necessary shareholders and other approvals.
The financial services company aims to grow the mortgage lender’s book size to Rs 20,000 crore in the next 18 months and to Rs 50,000 crore in the next few years.
Reliance Home Finance offers home loans, loans against property and construction finance.
It has assets under management (including securitized portfolio) of Rs 8,259 crore ($1.2 billion), outstanding loan book of Rs 7,750 crore and bad-loan ratio of 1% (on 90 days-past-due basis) for the quarter ended June 2016. It has 20,400 customers from the top 50 cities in India.
Reliance Capital is part of the diversified Reliance Group, which also has business interest in telecom, energy, power, infrastructure and defence sectors. Reliance Capital offers asset management services, sells mutual funds and insurance products, and also provides stock broking and wealth management services, among others.
Betting on home finance
The housing finance segment has seen a number of deals in recent months. In February, Au Financiers (India) Ltd sold its housing finance arm to a joint venture of local private equity firm Kedaara Capital and Swiss investment firm Partners Group to augment the holding company's capital base and independently grow the home finance book.
In the same month, Temasek-controlled non-banking finance company Fullerton India Credit Company announced launching of a housing finance subsidiary, Fullerton India Home Finance. Carlyle, in a deal with Destimoney Enterprises Pvt. Ltd. had acquired a 49% stake in PNB Housing Finance last year.
TPG Capital and Baring Private Equity Asia are slugging it out to buy a home finance company from ICICI Bank.
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