Weaver Services to buy Centrum Housing Finance for Rs 600 crore

Kolkata: A platform backed by private equity major Gaja Capital is in the final stages of acquiring a majority stake in a mortgage lender owned by the Centrum Group, reflecting the growing confidence of impact funds in India's large and expanding housing finance sector.

Weaver Services, founded by former HDFC executives including its M&A head Satrajit Bhattacharya, will acquire 75% of Centrum Housing Finance for ₹600 crore, multiple people close to the discussions told ET. This puts the enterprise valuation of the mortgage lender at ₹800 crore, about 2 times the company's adjusted net worth.

Central bank rules require Centrum, which also owns a banking licence, to choose between its operational small-finance bank and the home financier for running its mortgage business.

Centrum Capital owns 56.39% in Centrum Housing Finance while its associate companies and employees own another 18.62%. Morgan Stanley PE owns the balance 24.99%. Weaver will acquire the stakes owned by the Jaspal Bindra-led Centrum group, whereas Morgan Stanley PE will retain its existing holding. Consequently, Weaver Services will become the largest shareholder in Centrum Housing Finance.

Centrum Capital did not respond to queries. Weaver Services' Bhattacharya did not wish to comment.

ET in October last year wrote that Centrum was negotiating with five-six investors for the sale. That time, it was looking for a higher valuation for the company-at 3x multiples of net worth of ₹450 crore.

Centrum Housing Finance's assets under management stood at around ₹1,600 crore. It is present across 96 locations and has more than 10,000 customers. It operates in the affordable housing space in tier 2 and 3 cities.

Reasonable valuation
"The valuation of the housing market has come down over the past six months as the credit quality in the affordable segment has suffered," a person tracking the sector said. "Centrum has decided to exit at a lower valuation instead of waiting for a better price because this development will provide it an opportunity to launch the housing business afresh through the bank it owns."

Last year, Warburg Pincus completed the acquisition of the entire stake of Shriram Finance, paying ₹4,630 crore, at 2.8 times Shriram Housing Finance's net worth. The year before, TPG Global-affiliated Perseus SG picked up the majority stake in Poonawala Housing Finance for ₹3,004 crore.