TPG Capital acquires Poonawalla Housing Finance 

After six months of hard negotiations, US-headquartered private equity major TPG Capital wraps the deal with Poonawalla Fincorp to acquire 100 per cent stake in its housing finance arm.

In a board meeting held on Wednesday, TPG Capital emerged the front runner. The transaction is sized at ₹3,900 crore. Sources say that in addition to the purchase consideration, TPG Capital will deploy ₹1,000 crore into Poonawalla Housing Finance as part of its capital infusion commitment. An announcement in this regard is likely soon.

Taking the deal valuations to nearly 3.5x price to book, the transaction is one of the largest in the affordable housing segment till date. Poonawalla Housing Finance is fully owned subsidiary of Poonawalla Fincorp.

On November 23, businessline had reported that TPG and ChrysCapital were in a race to pick full control of Poonawalla Housing.

In May, Poonawalla Fincorp’s board had approved a capital raise permitting an equity dilution by the promoter of up to 15 per cent in the housing finance company. However, with limited interest, Poonawalla Fincorp started exploring a complete exit from the business by July.

Explaining the rationale for the decision, Adar Poonawalla, Chairman, Poonawalla Fincorp, said: “Poonawalla Fincorp will continue to focus on its growth coming from Tech-Led businesses and a branch-lite model while Poonawalla Housing will follow its own differentiated path as a completely independent business. As a global leading investment firm, TPG’s experience in building and supporting leading financial services companies will add greater value to Poonawalla Housing.”

Sources say that TPG would retain the Poonawalla branding for a year as part of the deal, post which the company may undergo a name change.

The Pune-based vaccine makers made a splash into the non-banking financial services space in 2021 when Rising Sun Holdings Private Limited, a company promoted by Adar Poonawalla acquired the Kolkata-headquartered Magma Fincorp for ₹3,456 crore. It was renamed as Poonawalla Fincorp in July.

Deal contours

• Poonawalla Fincorp sells its housing finance arm to TPG for ₹3,900 crore
• TPG to additionally deploy ₹1,000 crore as capital infusion
• At 3.5x price-to-book, it’s the largest deal in the affordable housing segment
• TPG to retain Poonawalla branding for a year