TVS Holdings, Premji Invest & other associates to acquire Home Credit India for Rs 686 cr

New Delhi: TVS Holdings Ltd on Friday said it will acquire 80.74 per cent stake in Home Credit India Finance Pvt Ltd, with the remaining 19.26 per cent stake to be purchased by Premji Invest and other associates for an overall value of Rs 686 crore.

The total deal is for Rs 686 crore, with TVS Holdings paying Rs 554.06 crore for a majority stake of 80.74 per cent, while Premji Invest would hold around 11 per cent stake and the rest with other associates.

The Board of Directors at its meeting held on Friday approved the acquisition of 88,09,45,401 equity shares of Home Credit India Finance Pvt Ltd (HCIFPL), amounting to an 80.74 per cent stake, from Home Credit India BV, an entity based in the Netherlands and Home Credit International AS, a Czech Republic-based entity, TVS Holdings said in a regulatory filing.

The aggregate consideration for the acquisition of an 80.74 per cent stake in Home Credit India Finance is Rs 554.06 crore, it added.

Addressing a virtual conference, TVS Holdings Managing Director, Sudarshan Venu said the remaining 19.26 per cent of the equity stake in Home Credit India Finance will be purchased by Premji Invest and other associates.

Home Credit India Finance is engaged in the business of providing unsecured loans and is one of the leading players in the consumer financing market and the personal loans segment, the filing said.

It had an Assets under Management (AUM) of Rs 5,535 crore as of March 31, 2024. It focuses on New-to-Credit (NTC) customers, enabling them with consumer durable loans for low-cost smartphones, along with personal loans.

The company has an employee base of 3,800 and a strong network of over 50,000 points-of-sale (PoS) spread over 625 cities across India. It had clocked a turnover of Rs 1,720 crore in 2022-2023.

On the reasons behind the acquisition, Venu said financial services represent a huge opportunity in India as the country will continue to be the fastest-growing large economy for many years and in the next five years is expected to become the world's third-largest economy.

The country's "unprecedented growth is being fuelled by the new, confident, and aspirational India, on the back of a world-leading digital infrastructure", he added.

"Home Credit is a significant player in consumer financing with a lot of potential. Together with TVS Credit, the Group will now have a lending book of Rs 31,000 crore, taking us closer to our book-size goal of Rs 50,000 crore in the next three years," he said.

Collectively, Venu said, "We will now be serving 3 crore financial services customers across more than 90,000 touch points pan India." This acquisition aligns with the strategy of TVS Holdings Ltd to expand in the consumer finance sector, further strengthening its portfolio, the company said.

"HCIFPL will operate as a subsidiary of TVS Holdings Ltd, maintaining its brand identity and autonomy," it said, adding that HCIFPL would benefit from the resources and support of TVS Holdings Ltd.

When asked if Home Credit could be merged with TVS Credit going ahead, Venu ruled out such a move in the near future but said it could be considered at the "right time".

Premji Invest Managing Partner, and Chief Investment Officer, TK Kurien said, "As an existing shareholder in TVS Credit, we are delighted to partner with TVS Holdings in the Home Credit India acquisition. We are confident that this acquisition will help the company accelerate scale and profitability and build significant value for all stakeholders." The proposed transaction shall be subject to the approval required by HCIFPL from the Reserve Bank of India, with respect to change in control and board of directors, the filing added.

On the other hand, TVS Holdings is required to obtain approval from the Competition Commission of India under the Competition Act, 2002, for the completion of the proposed transaction.