Indiabulls Housing Finance Ltd-backed OakNorth Bank has sold a 16% stake for $203 million (Rs 1,318 crore) to three investors, the Indian company said.
The stake was picked up by the Clement Group, Toscafund and Coltrane. The London-based bank was valued at $1,270 million.
In the first major share purchase in a UK bank by an Indian mortgage lender, Indiabulls Housing had picked up a 39.8% stake in OakNorth in November, 2015. However, the company said that it now owns a 30% stake valued at $380 million, clocking a multiple of 3.8 times on its investment of $100 million.
Subsequently, Indiabulls Housing promoter and chairman, Sameer Gehlaut, had purchased a 10% stake in OakNorth for $25 million.
OakNorth was founded by Indian-origin serial investor Rishi Khosla and Joel Perlman. The bank also counted Sushil Wadhwani, a former member of the Bank of England’s Monetary Policy Committee who runs his own asset management firm, as a shareholder.
It began operations in May 2015 as a technology-focused lender. It offers short-term working capital loans and term loans to small and medium businesses, and savings products to retail customers.
While lending to SMEs in Britain is dominated by property-backed loans, OakNorth offers multiple-collateral loans. In effect, it is trying to solve the same problem that SMEs face in India. In India, non-banking finance companies, such as Indiabulls, try to bridge the gap left by commercial banks. Indiabulls Housing is looking at a similar play in the UK.
Indiabulls Housing had invested in OakNorth after it failed to get a banking licence in India. It was one of two dozen applicants for a retail banking licence.