Weaver Services has successfully completed its acquisition of Capital India Home Loans Ltd. in a significant move that marks its entry into the affordable housing finance segment. The company finalized the 100% acquisition for Rs 267.00 crore after securing necessary regulatory approvals.

Acquisition Details

The transaction, valued at Rs 267.00 crore, was funded through equity raised from notable investors:

• Premji Invest
• Gaja Capital
• Individual investors

This strategic acquisition positions Weaver Services to tap into the growing affordable housing finance market in India.

Strategic Expansion

Weaver Services aims to leverage this acquisition to launch a technology-driven affordable housing finance platform. The company's focus will be on:

• Targeting self-employed individuals in the unorganized sector
• Expanding services primarily in tier 2 and tier 3 towns
• Promoting financial inclusion, especially for women borrowers

Focus on Financial Inclusion

A key aspect of Weaver Services' strategy is to address the credit accessibility challenges faced by women borrowers. The company recognizes that many women, particularly in smaller towns and unorganized sectors, struggle to obtain credit from traditional lenders. By focusing on this underserved segment, Weaver Services aims to play a crucial role in promoting financial inclusion.

Technology-Driven Approach

The company plans to differentiate itself by implementing a technology-driven platform for its affordable housing finance operations. This approach is expected to streamline processes, improve accessibility, and potentially offer more competitive services to its target market.

This acquisition and subsequent expansion into affordable housing finance represent a significant milestone for Weaver Services, potentially opening up new growth avenues in India's dynamic financial services sector.

In a significant move in the financial services sector, Weaver Services, a platform backed by Gaja Capital, is set to acquire a 75% stake in Centrum Housing Finance for Rs 600 crore. This acquisition values the mortgage lender at an enterprise valuation of Rs 800 crore, which is approximately two times the company's adjusted net worth.

Deal Structure and Valuation

The deal structure reveals interesting dynamics in the ownership of Centrum Housing Finance:

• Weaver Services will acquire the Centrum group's holdings.
• Centrum Capital currently owns 56.39% of the company.
• Morgan Stanley PE holds a 24.99% stake and will retain its existing position.

It's worth noting that the valuation represents a decrease from Centrum's earlier expectations, which were reportedly around 3 times the net worth.

Regulatory Considerations

The acquisition comes amidst regulatory requirements that impact Centrum's operations:

• Central bank regulations necessitate Centrum to choose between operating its small-finance bank or the home financier for mortgage business.
• This regulatory constraint likely influenced Centrum's decision to divest its majority stake in the housing finance arm.

About Centrum Housing Finance

Centrum Housing Finance has established a significant presence in the affordable housing sector:

• Operates across 96 locations
• Serves over 10,000 customers
• Manages assets of approximately Rs 1,600 crore

Strategic Implications

This acquisition by Weaver Services, founded by Satrajit Bhattacharya, marks a strategic entry into the housing finance sector. The move could potentially leverage Weaver's platform and Gaja Capital's backing to further expand Centrum Housing Finance's operations in the affordable housing segment.

For Centrum Group, this divestment aligns with regulatory requirements and may allow the company to focus on its other financial service offerings, including its small-finance bank operations.

The retention of Morgan Stanley PE's stake suggests continued confidence in the potential of Centrum Housing Finance, despite the valuation being lower than initially anticipated.

As the affordable housing sector continues to be a focus area for both the government and financial institutions, this acquisition could position Weaver Services to capitalize on the growing demand for housing finance in this segment.