M&A: Arpwood Partners to acquire majority stake in SEWA Griha Rin (Sitara)

by | Jul 4, 2024 | Insights, Merger & Acquisitions | 0 comments

Transaction:

  • Arpwood Partners has entered into an agreement to acquire majority stake in Sitara for infusion of equity capital of Rs. 680 crores for financing its business growth.
  • The existing investors including Investors including Abler Nordic, Oikocredit, RNT Associates, HDFC Bank, HDFC Life Insurance, Women’s World Banking Asset Management, and Omidyar Network infused another Rs. 25 crores in the company, taking total to Rs. 705 Crores.

About SEWA Grah Rin (Sitara):

  • Sitara started in 2015, provides affordable housing finance to the under-served low-income households, especially women in the informal sector.
  • The financial services company operates through a network of 75 branches in nine states including Delhi, Rajasthan, Madhya Pradesh, Uttar Pradesh, Bihar, Maharashtra, Gujarat and Haryana. It has an AUM of about Rs 1,200 crore and over 25,000 customers.

About Arpwood Partners:

  • Founded in 2015, Arpwood Partners is a PE firm based in Mumbai. Started by Amol Jain and Rajeev Gupta of erstwhile IB from Arpwood Capital.
  • Arpwood Partners Fund I LLP is a buy-out focused private equity fund that invests in mid-market franchises, driven by strategic clarity, empowering management teams, and operational excellence in their portfolio companies. Their portfolio investments include Sterling hospitals, Vishal Mega Mart, HDFC Bank and Senvion India.

Rationale:

  • Sitara, a SEWA initiative operates in providing loans for house purchase, construction, incremental upgradation or improvement, and a loan against property that can be used for personal or business reasons. The loans come with tenures of up to 20 years and interest rates from 18% p.a. The minimum loan amount offered is Rs. 50,000 with an average ticket size of Rs 2.65 lakh.
  • The capital infusion by Arpwood Partners will help enhance the capacity of the company to support women in realising their dream of owning a house of their own. The operating model emphasizes assisting customers to formalise their collateral and helps in their social upliftment.
  • With the capital, the firm plans to increase its customer count to 500,000 in the next five years.
  • In December 2023, the firm raised Rs. 120 crores in debt funding from British International Investment, the UK’s development finance institution.
  • There is a documented shortage of 10-12 million housing units in urban India, with 96% of that shortage occurring in economically weaker segments. Additionally, 26-37 million urban households live in informal settlements that are inadequate to live in.
  • As reported by CareEdge Ratings, Affordable Housing Finance Companies (AHFCs) experienced a resurgence in growth during FY23, expanding by 27% year-over-year. This growth trajectory is expected to continue, forecasting a 29% growth in FY24 and a further 30% in FY25 for AHFCs.
  • In April 2024, US based PE firm Warburg Pincus fully acquired one of the fastest growing housing finance company Shriram Housing Finance Limited for Rs. 4630 crores.

Acknowledgements: 

RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)

Disclaimer:

This material has been prepared by the personnel in Vora Corporate Finance which is Investment Banking arm of Vora Management Consultancy Private Limited and looks after Mergers & Acquisitions (M&A), Private Equity (PE), Fund Raising, Debt syndication and Valuations and is based out of Ahmedabad, Gujarat, India. Any views or opinions expressed herein are solely that of individual authors and may differ from view of Vora Management Consultancy Private Limited. This material is proprietary to Vora Management Consultancy Private Limited and is for your personal use only. Any distribution, copy, reprints or forward to others is strictly prohibited.

This material captures the information based on information available in the public domain, public announcements and sources believed to be reliable. Analysis contained herein is based on publicly available information and appropriate assumptions. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute strategic, investment, legal or tax advice. In no event Vora Management Consultancy Private Limited be liable for any use by any party or for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you for evaluating any transaction.