IndoStar Capital Finance Surges 13% on Sale of Subsidiary

Indostar Capital Finance witnessed a significant surge in its shares, rising by 13% to reach a 52-week high of Rs 339.7 per share on Friday. The spike in share prices followed the approval by the company’s board for the sale of its subsidiary, IndoStar Home Finance Private Limited (IHFPL), to WITKOPEEND B.V for a whopping Rs 1,750 crore.

However, the initial gains were later trimmed, and by around 9:49 AM, the stock was up by 4.08% at Rs 313.65 per share on the BSE. Concurrently, the BSE Sensex was trading at 83,322.08, marking a 137-point increase around the same time.

The company announced in an exchange filing that its board has given the green light for the sale of IHFPL to WITKOPEEND B.V., an affiliate of BPEA EQT Mid-Market Growth Partnership (EQT). The transaction, valued at Rs 1,750 crore on a fully diluted basis, is subject to various approvals, including from the Reserve Bank of India (RBI), lenders, and shareholders.

Moreover, EQT plans to inject Rs 500 crore into IHFPL post the transaction’s closure, aiming to fuel the subsidiary’s growth. The move is expected to provide IndoStar with the necessary capital for accelerated expansion in its core sectors of Vehicle Finance and Small Business Loans.

Commenting on the acquisition, Ashish Agrawal, a Partner at EQT Private Capital Asia, emphasized the long-term growth prospects of India’s affordable housing finance sector, underlining the strategic importance of the investment.

IndoStar, a registered non-banking finance company with the RBI, primarily focuses on providing commercial vehicle financing and affordable home finance through its subsidiary, IHFPL. Over the past year, the company’s shares have gained 74.09%, outperforming the BSE Sensex’s rise of 24.5% during the same period.

The sale of IHFPL marks a strategic move for IndoStar, enabling it to bolster its financial position and drive growth in key segments. With EQT’s investment and support, the company is poised to capitalize on emerging opportunities in India’s financial landscape, solidifying its market presence and enhancing value for stakeholders.

In conclusion, IndoStar’s decision to divest IHFPL signifies a strategic realignment to focus on core business verticals, setting the stage for sustained growth and value creation in the competitive financial services industry.