Shriram Housing Finance explores acquisition to grow in size

shriram, shriram housing finance, shriram group, acquisition, sumitomo mitsui financials

Shriram Housing Finance, a part of the Shriram Group, is scouting for acquisitions as it aims to grow about two-and-a-half times in the next two years. The company has renewed its search after an aborted attempt last year.

“We are hungry for growth. We keep sending feelers to prospective acquisition targets,” managing director Ravi Subramanian told ET.

The lender, which primarily focuses on the affordable housing segment, has expanded its loan book 65% to Rs 3,910 crore at the end of June from Rs 2,369 crore a year back despite disruptions and economic stress due to the pandemic. It now aims to reach Rs 10,000 crore by March 2024.

The company was looking to acquire Fullerton India Home Finance last year before Sumitomo Mitsui Financials bought it, according to people familiar with the matter.

“We are targeting companies with around Rs 1,500 crore asset book, which can provide us sustainable growth in the future. We don’t want to merely buy out housing loan portfolios,” Subramanian said in an interview.

It disbursed Rs 1,005 crore in the March quarter, out of which Rs 366 crore was on account of buyouts.

Shriram City Union Finance, which holds 81% in the company, will infuse Rs 300 crore in the December quarter, which would make it sufficiently capitalized for next year. The parent had already injected Rs 200 crore in April. Valiant Partners holds the balance 19% stake in the housing finance lender.

It is present in 16 states but is focused on 6-7 states where other Shriram group companies have significant presence and enjoy brand visibility. The affordable housing segment contributed about 70% of its business.

It is focusing on leveraging Shriram group’s distribution network to accelerate growth with the groups’ credit tested customers. It has launched Griha Poorti, a cross-selling initiative, in Andhra Pradesh and Telangana and is planning to expand the initiative in Tamil Nadu and Karnataka next year. The group has about 2,000 branches across the country.

“Our collection efficiency is around 99% on new loans, which is about 80% of our portfolio,” the MD said.

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