MUMBAI: Edelweiss Financial Services has said that the US-based asset manager Carlyle group has agreed to pick up 45% of the company’ subsidiary Nido Home Finance for Rs 2,100 crore, which over time will go up to 73%.
The announcement along with robust earnings saw the shares of the parent Edelweiss soaring 9% on Tuesday.
The company said its net profit more than doubled to Rs 264 crore on-year despite a marginal 3.4% fall in interest income.
The Carlyle investment includes acquisition of a 45% stake and a primary equity capital infusion of Rs 1,500 crore in the Edelweiss unit. With this deal, Carlyle joins the likes of Blackstone and Sumitomo Mitsui Financial Group in betting on the booming domestic housing finance sector.
At the end of the deal, investment funds affiliated with Carlyle Asia Partners will hold about 73% of Nido, Edelweiss added.
Last year, Carlyle had sold its decade-old investments in PNB Housing Finance and Yes Bank.
"Established in 2010, Nido is a leading affordable housing finance company, and mass-market segments. Nido operates a network of branches, serving over 800 sub-districts, and has a loan book of Rs 4,804 crore," the statement said.
"For Carlyle, the investment reflects its continued commitment to supporting the high growth housing finance sector in the country and builds on its more than two decades of expertise, operating capabilities and strong track record investing in the country’s financial services sector, including in housing finance businesses such as PNB Housing Finance and the erstwhile HDFC," it added.
Aditya Puri, senior advisor to Carlyle in Asia, and former chief executive of HDFC Bank, will also participate as an investor, said the NBFC.
Rashesh Shah, founder-chairman of Edelweiss, said the investment by Carlyle in Nido is a key milestone and brings in a high-quality, long-term partner to accelerate Nido’s next phase of growth.
At a time when the housing finance sector is witnessing strong structural demand, supported by rising affordability and deeper access to formal credit, Nido is well-placed to participate meaningfully in this opportunity, he added.
Sunil Kaul, a partner and Asia financial services sector lead at Carlyle, said, "Housing remains a critical national priority here, and we have strong conviction in the growth potential of the housing finance industry."
Edelweiss also said its alternative asset management saw a 33% increase in fee-paying assets under management at Rs 41,920 crore in the December quarter.
During the quarter, its mutual fund business AUM surged 33% as well to Rs 83,000 crore and its SIP book crossed the Rs 500 crore-mark after increasing 55% from the previous year.