Baring Private Equity Asia EQT and private equity fund ChrysCapital have acquired Credila Financial Services from Housing Development Finance Corporation (HDFC) for Rs 9,060.5 crore. In addition, HDFC Credila will receive a subscription amount of up to Rs 2,003.61 crore as a part of the proposed transaction.
The agreement was executed on Monday and the education loan company is being acquired by two groups of entities. These are Kopvoorn, Moss Investments, Defati Investments Holding, and Infinity Partners. Kopvoorn is a part of Baring Private Equity Asia EQT. Moss Investments, Defati Investments Holdings, and Infinity Partners are part of ChrysCapital.
The closing of the proposed transaction will take place 15 business days from the completion of all conditions precedent, including receipt of regulatory approvals or any other date that has been agreed between the parties. The long stop date is March 31, 2024.
Education financier HDFC Credila Financial Services is a wholly owned subsidiary of HDFC. After the HDFC Bank-HDFC merger, the Reserve Bank of India had put conditions that the merged entity would have to exit/reduce stake in unrelated areas. HDFC Credila was one of the subsidiaries that came under scrutiny.
The merger, expected in the next few weeks, is focusing on getting out of businesses or reducing stakes in them.
According to the exchange notification, the company has said that the RBI vide its letter dated April 20, had provided certain forbearances/ clarifications to HDFC Bank. Under the said letter, RBI had inter alia advised that shareholding in HDFC Credila Financial Services (“HDFC Credila”) (a wholly-subsidiary of the Corporation) be brought down to 10% within two years from the effective date of the scheme.
As part of the deal, Baring EQT and ChrysCapital will acquire 132.9 million shares of HDFC Credila.
According to the agreement, HDFC shall have the right to nominate one non-executive nominee director on the board of HDFC Credila on terms as agreed under the shareholders’ agreement.
It shall have customary pre-emptive rights under the shareholders’ agreement.
The total revenue of HDFC Credila during FY23(April –March) was Rs 1,352 crore while its net worth stood at Rs 2,435.1 crore as on March 31.