India: Morgan Stanley Managed Fund to Invest Rs 190 Crore in Centrum Housing

Feb 2020
India, February, 03 2020 - Currently, Centrum's loan book is a little over Rs 2,000 crore (about USD 280 million), of which over Rs 1,000 crore is the SME (small and medium enterprises)book, Rs 600 crore is home finance and the rest is microfinance.

The Jaspal Bindra-controlled Centrum Group has roped in Morgan Stanley to invest Rs 190 crore in its retail-affordable housing-focused lending arm Centrum Housing Finance ltd (CHFL). The infusion by a fund run by Morgan Stanley Private Equity Asia will lead to the private equity (PE) giant acquiring a "significant minority stake" in CHFL, which began operations in April 2017, the companies said in a joint statement without disclosing how much the equity dilution will be.

CHFL has a loan book of over Rs 500 crore and operates through 36 branches across Gujarat, Madhya Pradesh, Rajasthan, Maharashtra, Chhattisgarh, and Delhi, serving over 3,500 customers.

The fund managed by Morgan Stanley will be the first external institutional investor in Centrum Housing, an arm of the publicly traded Centrum Capital, which manages assets of over Rs 2,000 crore.

Bindra had told in December that Centrum Group was in talks with PEs to sell 15-25 per cent stake in the NBFC for around Rs 250 crore.

The main promoters of the group -- veteran banker and former chief executive of Standard Chartered Bank Asia Pacific Bindra and group founder Chandir Gidwani -- were looking at diluting 15-25 per cent in the credit vertical in a phased manner, Bindra, who had picked up over 25 per cent stake in the group in April 2016, had said.

"We are talking to a number of PEs and a deal should be concluded very soon. We can dilute between 15 and 25 per cent step by step for Rs 150-250 crore. Maybe we will begin with SME arm and then microfinance," Bindra had said.

Centurm Group has been driving its credit business through acquisitions. It first acquired the Rs 100-crore microfinance portfolio of South African lender First Rand Bank India in 2017, followed by L&T Finance's supply chain finance book of Rs 650 crore in September 2018.

Last month, it took over New Delhi-based microfinance player Altura Finance's Rs 100 crore portfolio.

Bindra had said he was keen on more acquisitions after the deal with a PE investor gets completed.

"At least half the money raised will be used for acquisitions and the rest will be used as growth capital," he had said.

Currently, Centrum's loan book is a little over Rs 2,000 crore, of which over Rs 1,000 crore is the SME (small and medium enterprises)book, Rs 600 crore is home finance and the rest is microfinance.

Centrum Housing is led by industry veteran Sanjay Shukla, who has 30 years of retail lending experience and had previously headed Tata Capital's housing finance arm.

Bindra, executive chairman of the Centrum Group said, "Together with Morgan Stanley, we will work to grow the business nationally as there is a big opportunity in the low to middle income segment in small cities. We will continue to focus and grow in these segments."

Arjun Saigal of Morgan Stanley Private Equity Asia said the investment follows the large potential in the affordable housing space which is under-penetrated and offers tremendous opportunity for growth.

This will be the fourth investment in retail lending space in India by funds sponsored by Morgan Stanley Private Equity Asia, he added.

Source : ETRealty

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