True North to invest $100 mn in Home First Finance

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Homegrown private equity firm True North Managers LLP is set to acquire a majority stake in Mumbai-based Home First Finance Company India Pvt Ltd for about $100 million (Rs 667 crore).

Home First said in a statement the discussions with True North are in advanced stages and it has received necessary approvals from the National Housing Bank. The company will use the money to expand to new regions and reach out to more customers in the affordable housing segment.

The mortgage lender didn’t specify the exact stake True North, earlier known as India Value Fund Advisors Pvt. Ltd, will pick up or whether any existing investor will exit in this round.

However, The Times of India reported that the transaction is a combination of a fresh issue and a secondary sale. Out of the $100 million, True North will invest about half in the company and the rest will be paid to existing shareholders. The deal will value the housing finance company around $150-175 million, the report said, citing a person familiar with the development.

Home First, which was set up in 2010 by former Mphasis chairman Jaithirth (Jerry) Rao and former Citibank Consumer Banking Head PS Jayakumar, had been growing at a compounded annual growth rate of over 50%. It had raised capital from Bessemer Venture Partners (BVP) in 2010 and 2012, and from Alpha TC Holdings Pte Ltd, the private equity firm managed by Tata Capital Growth Fund, in 2013.

Emails sent to the company, BVP and Tata Capital Growth on partial exits did not elicit any response.

Home First also said that though True North will have a majority stake once the deal is completed, the existing management and employees will continue to run the company.

“The management will have a 10% stake in the company and about 30% will be with these investors,” the newspaper reported.

True North is a private equity fund with $2 billion assets under management. It provides growth-stage capital to companies operating in India. It has made investments in consumer-focused industries like media and entertainment, radio taxi, retailing, food services and financial services besides healthcare.

It had, earlier this year, restructured its business to add technology products and services to its portfolio. In the past 17 years, the firm has worked with over 30 businesses and invested over Rs 8,000 crore of equity capital.

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.

The initial share sale of PNB Housing Finance Ltd was covered 29 times as the mortgage lender joined a host of local companies that had received strong response from investors for their public offerings in 2016.

Other recent fundraising include that of Delhi-based Ummeed Housing Finance Pvt Ltd, which raised Rs 23.4 crore in a Series A round from impact investor Lok Capital and Duane Park in 2016.

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

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