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Warburg Pincus expands India BFSI basket with bet on Home First Finance
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Warburg Pincus will invest Rs 700 crore ($95.38 million) in Home First Finance Company India Ltd, as the US-based private equity firm continues to bet big on India’s financial services sector.

The PE firm’s investment will comprise a primary capital infusion into the affordable housing loan provider and a purchase of stake from some existing shareholders, Home First said in a statement.

The mortgage lender didn’t give a break-up of the primary and secondary components. It also didn’t specify the size of the stake that Warburg is buying or who was selling the shares, saying only that Warburg joins existing shareholders True North and Bessemer Venture Partners.

However, True North is likely to have sold some of its stake in this transaction. The Indian mid-market PE firm is the promoter of the mortgage lender and owned three-fourths of the company as of November 2019, when it filed for an initial public offering.

True North had planned to make a partial exit in the IPO, which received regulatory approval in March. Home First didn’t say if the IPO is still on track.

US-based Bessemer was the first institutional investor of Home First in 2010, the year the company was set up. Tata Capital Growth Fund came in as a PE investor three years later.

In 2017, Tata Capital secured an exit when True North bet Rs 652 crore ($100 million then) to buy a 71.5% stake in Home First. True North subsequently increased its stake to 76.6%. Bessemer owns about 16.2% of Home First while individual shareholders own the remaining stake.

Home First has a presence in 60 districts across 11 states. As of March 31, 2020, it had assets under management of Rs 3,618 crore. Gross non-performing assets were at 0.87% of total loans.

Meanwhile, the deal expands Warburg’s portfolio of banking, financial services and insurance companies in India.

The PE firm currently owns stakes in IDFC First Bank, Fusion Microfinance, IndiaFirst Life Insurance, AU Small Finance Bank, education lender Avanse Financial Services Ltd and SBI General Insurance.

It had previously invested and exited ICICI Lombard General Insurance and Kotak Mahindra Bank, among other financial services firms in India. It also sold part of its stake in AU Small Finance Bank for the fourth time earlier this year.

According to its website, Warburg Pincus has more than $53 billion in assets under management. It has an active portfolio of more than 185 companies across the world. It invests in energy, financial services, healthcare, technology, and industrial and business services sectors.

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