Centrum Group to Finalise Sale of Housing Finance Subsidiary
The Centrum Group, a prominent financial services organization, is expected to conclude the sale of its housing finance subsidiary before the end of the fiscal year. Discussions are underway with five to six potential investors to determine the valuation of the company. While there is a possibility of a complete sale, partial monetization is also being considered.
Talking Valuations
As Centrum looks to finalize the sale of its housing finance subsidiary, they are seeking a valuation of approximately Rs 1,300 crore. Interestingly, this is slightly below the current market capitalization of Centrum Capital, the operating holding company of the group. Negotiations between Centrum and the potential investors are progressing well, with the final due diligence and valuation processes currently underway.
Spanning Interests and Ownership
With eclectic interests spanning various sectors like finance and wealth management, the Centrum Group holds a majority stake amounting to around 60% in the mortgage lending arm of Centrum Housing Finance. Another notable stakeholder is Morgan Stanley, which owns a 25% stake. The remaining shares are distributed among the employees and others associated with the organization.
Exploring Possibilities
The investors currently considering Centrum Housing Finance have shown interest in aspiring for a complete acquisition of the company. However, they are also open to the options of majority or minority stake acquisitions. The Centrum Group aims to explore all potential avenues before making a decision, with the ultimate outcome dependent on factors such as valuation and counterparty.
Strong Growth and Expansion
In recent years, Centrum Housing Finance has acquired the business of National Trust Housing Finance Natrust, allowing them to expand into the southern market. With a net worth of Rs 450 crore and assets under management amounting to Rs 1500 crore, the housing finance subsidiary has grown steadily since its inception in 2017.
Progress and Consolidation
The Centrum Group has displayed remarkable financial achievements, with consolidated revenue reaching Rs 868 crore by the end of September, marking an impressive growth of 61% compared to the same period last year. Their EBITDA also reflects this positive trend, standing at Rs 401 crore, an increase of 68% year-on-year.
Overall, the impending sale of Centrum Housing Finance marks a significant milestone for the Centrum Group. By strategically assessing investors’ interests and diligently conducting due diligence, the outcome of this transaction promises to be an exciting prospect for both Centrum Group and the potential buyer.
