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Finance

India Value Fund Advisors, Baring Asia team up to buy ICICI Home Finance

India Value Fund Advisors, Baring Asia team up to buy ICICI Home Finance

Synopsis

ICICI Bank had put the home finance arm on sale in July last year and was expecting a value of around Rs 4,400 crore.
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MUMBAI: Private equity fund India Value Fund Advisors is teaming up with Baring Asia, one of the largest Asia focussed buyout funds to buy ICICI Home Finance for approximately Rs 2,400-2,500 crore, trumping TPG Capital, said multiple sources aware.

This will end a year long search to find a new buyer for the business, identified as non core by India’s largest private sector lender Earlier this week, ICICI Bank is believed to have officially informed TPG that they are out of the reckoning following an internal meet over the weekend these sources added.

IVFA-Baring Asia’s offer was better than TPG’s Rs 2,200-2,300 crore bid and even though the fund was willing to match the winning offer, they were rejected. The deal is estimated to be 1.6 times the value of the book.

A formal announcement is likely shortly. India Value Fund Advisors or IVFA with its investors, or Limited Partners in industry parlance, will own 65 per cent stake, while the rest will be held by Baring Asia.

Limited Partners will not have any rights on the company. TPG Capital refused to comment on the story while Baring Asia, IVFA and ICICI Home Finance did not respond to emailed questionnaires.

ICICI Bank had put the home finance arm on sale in July last year and was expecting a value of around Rs 4,400 crore. The first round of bidding attracted interest from TPG, Baring Asia, Piramal Group, Bajaj Finance and Partners Group. However, by December only TPG and Partners Group remained in the race. In the final round TPG had emerged as the main buyer.

But deal was put on hold due to some differences between TPG and ICICI. Renegotiations started in June this year and by July, the deal was almost signed. However, at the last moment, Baring Asia reached out to ICICI and offered to pay top TPG’s offer by 10 per cent and also agreed to some of the seller’s other terms.

People in the know said that TPG had worked hard at putting together a team of senior finance experts to lead the housing finance arm. The fund had already roped in R Sridhar, the former managing director and chief executive officer of Shriram Transport Finance, in which TPG was an early investor.

ICICI Home Finance's net profit for the financial year ended March 2016 was Rs 180 crore versus Rs 198 crore in the same year-ago period. Total assets of the home finance arm increased by Rs 100 crore in the financial year and touched about Rs 931crore as per the bank’s annual results.

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