Statements of Shriram Housing Finance on merger talks, valuation may pose hurdles

In an especial interaction, managing director of Shriram Housing Finance Ravi Subramanian said ET, “There is only one active prospect that we are pursuing, but there again, valuation is a hurdle. I won’t pay recklessly to grow,”

Shriram Housing Finance, a subsidiary of Shriram City Union Finance is trying to achieve a modest lender in the affordable housing spaces for acquisition and creating a new joint organization while the valuation mismatch can erupt obstructions to the scheme.

The targeted company is probably to be in the Rs 2,000-3,000 crore league.

Further Subramanian said, “the discussions are still going on. But we have to get them to the table at the end of the day.. If it works out, it is ok. If it does not, we will be building ourselves,”

The lender is analogously planning a Rs 1,000-crore capital raise to fund its business growth which is probably to be in the first quarter of the next financial year. Shriram City Union Finance comprises 85% in its housing unit infused Rs 500 crore last year into it.

According to the MD, the mortgage lender recorded a loan asset growth of 54% YoY to Rs 6,546 crore by the end of September and is heading to achieve the Rs 10,000 crore mark by September 2023, ahead of the earliest target of March 2024.

He said, “That is why we are not willing to bend backwards and make an offer at any valuation.”

It can also strengthen the vast network of the Shriram group for business growth.

Further Subramnian said, “So there are two independent channels (organic and inorganic), which we are pursuing at full steam.”

About 35-40% of its business ensue from the southern states—Karnataka, Tamil Nadu, Andhra Pradesh and Telangana and analogously being very strong in Gujarat.

The official said that the company may explore finding a new investor for capital raising.

He said, “Last time we raised money from our existing investors, but this time, we will most likely go outside and discover.”

The company was about to achieve Fullerton India Home Finance in 2020 earlier Sumitomo Mitsui Financials ultimately bought it, according to the familiar people of that matter.

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