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Shriram Housing Finance may postpone its planned $100 million share offering in order to assure higher valuations while the promoter Shriram Finance is also considering a capital infusion. In a recent interview with the press, the managing director of Shriram Finance, YS Chakravarti, stated that the issue of how to raise funds was still being debated. The company is considering whether to raise money by directly approaching investors, selling 10-20% of their current holdings or to launch an IPO.
At the moment, about 85% of the housing finance subsidiary is owned by Shriram Finance and the remaining 15% is owned by Valiant Mauritius (P) Ltd. The mortgage lender, which focuses on the affordable housing market, has been in talks with potential new investors for quite some time, but according to industry sources, a discrepancy in valuation calculations may have prevented a deal from being closed.
The business had originally hoped to finish raising money in the first quarter of FY24. Although an IPO is being discussed at the highest level, it might happen later due to the extensive process involved. The company might require additional funding given its present growth momentum by the end of the financial year.
Its assets under management (AUM) had increased by more than 50% YoY to Rs 8,047 Crore at the end of March. The company continued to grow quickly with AUM increasing 44% CAGR over the previous four years. It hopes to reach an AUM of Rs 10,000 crore by September and it wants to reach Rs 13,000 crore by March of the following year. The parent company invested Rs 500 crore on it last year.
Shriram Housing is making investments to increase the number of its branches which will increase its distribution. It has 131 branches currently and it plans to increase that number by 40 in FY24. Additionally, it intends to increase its sales and service staff by 1,000 employees to support the expansion of the branch network. Its business is mostly based in the western and southern states, with an average loan size of Rs 16.6 lakh.
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