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JM Financial picking significant minority stake in affordable housing finance firm

21 October, 2016

Financial services firm JM Financial Ltd, through its subsidiary JM Financial Products Ltd, is picking a 24.50% stake in India Home Loan Ltd (IHLL), by acquiring full holding of one of the promoters and another’s non locked-in shares and preferential allotment, according to a disclosure.

JM Financial is buying about 17.5% from the promoters of the Ahmedabad-based India Home Loan, an affordable housing finance company, who would no longer remain as promoters of the company post the transaction. As part of the agreement, one of the promoter Anant Bhalotia would sell his entire shareholding of 8.77% to JM Financial, while the other promoter Rishabh Siroya would sell his non-locked shares of 8.76%. 

The promoter group owns about 67.80% stake in the company and the rest by the public before sale of shares by two promoters. Post the preferential allotment, the promoter holding in the company would fall below 50%.  

The deal value at which the promoters are selling to JM Financial stands undisclosed, however, the acquirer would top-up separately for the additional stake.

A total of 4,00,000 equity shares of Siroya are locked-in and not part of the sale transaction. Siroya and Bhalotia have also resigned from the company. The sale requires the approval from the National Housing Bank of India. 

IHLL offers retail home loan product for affordable housing segment, offering loans for purchase of home, home improvement, home extension and for construction of a dwelling unit on an owned plot of land. It was formerly known as Manoj Housing Finance Company Ltd which was incorporated in 1990 and in 2009 the name was changed to India Home Loan Ltd.

In FY16, it reported total outstanding loans of Rs 31.41 crore from Rs 19.78 crore in the previous financial year. Its outstanding home loans to individuals is of Rs 23 crore and other loans including loan to developers for long-term housing projects and mortgage loans is of Rs 8.23 crore. In the same period, it reported revenues of Rs 4.15 crore. 

It operates from branches in urban, semi-urban & rural areas of Maharashtra and Gujarat with own offices, direct selling agents and business partners.

In May this year, Nimesh Kampani-JM Financial Products acquired 9.84% equity stake in peer-to-peer (P2P) lending marketplace Faircent, run by Fairassets Technologies India Pvt. Ltd.

In  August, Kampani, one of India’s top dealmakers, quit as the managing director of JM Financial Ltd with effect from 30 September 2016. His tenure was to last until the end of March 2017 but he has voluntarily stepped down. His son Vishal Kampani would take over as managing director from 1 October 2016.

JM Financial is a financial services group offering investment banking, institutional equity sales, trading, research and broking, wealth management, asset management broking and NBFC services. 

Stocks of the company closed 19.9% at Rs 60.15 on a weak Mumbai market. 

Housing finance under limelight

Several housing finance companies have been looking to grow business and loan portfolios by consolidating their market share in the affordable housing segment. These companies have seen high interest from investors.

Next week, mortgage lender PNB Housing Finance Ltd is opening its issue seeking a valuation of as much as Rs 12,850 crore ($1.9 billion) through the share sale.

Last week, Delhi-based Ummeed Housing Finance Pvt. Ltd raised $3.5 million (around Rs 23.4 crore) in a Series A round of funding from impact investor Lok Capital and Duane Park.

Last month, Chennai-based Aptus Value Housing Finance India Ltd raised Rs 270 crore in a follow-up round from WestBridge Capital Partners LLC and Caspian Impact Investment Advisors.

Another mortgage lender reported to be in the market for funding is HomeFirst Finance Company. In July, Carlyle-backed PNB Housing Finance Ltd filed its Draft Red Herring Prospectus for an initial public offering to raise up to Rs 2,500 crore.

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JM Financial picking significant minority stake in affordable housing finance firm

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