Financial services company Shriram Finance will sell its housing finance arm to private equity major Warburg Pincus for Rs 4,630 crore. This is reportedly Warburg Pincus’ single-biggest deal in India in over two decades.

Warburg will invest another Rs 1,000 crore in the 2011-incorporated Shriram Housing Finance (SHF) after the closure of the deal, which is expected by the end of this financial year in March 2025, Shriram’s Executive Vice-Chairman Umesh Revankar has said. SHF has grown at a compounded annual rate of over 50 per cent, and the Shriram Group wishes to focus on its mainstay of small business and vehicle lending rather than pumping capital into the company, Mr Revankar has added.

He has said that Shriram Finance has made an internal rate of return of 22 per cent on the capital deployed in SHF.

Shriram Finance owns 83.80 per cent of SHF while 14.80 per cent is with PE player Valiant, which is also divesting its stake in full, and the remaining 1.4 per cent is with employees. Under the deal, SHF would be acquired by Warburg Pincus through its affiliate Mango Crest Investment from all the sellers.

“The proposed transaction is valued at Rs 4,630 crore for equity and convertible instruments of SHF,” Shriram Finance has said in a regulatory filing.

The deal needs go-ahead from National Housing Bank, Competition Commission of India and Reserve Bank of India. Shriram Finance is one of India’s leading NBFCs, serving over 84 lakh customers across India, offering commercial vehicle loans, two-wheeler loans, and MSME financing.