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Bengaluru/Mumbai: Weaver Services Pvt. Ltd, an affordable housing finance company founded by former employees of HDFC Ltd, is in talks to raise about ₹1,000 crores from Premji Invest and Paragon Partners, three people familiar with the matter told Mint.
“Some of the proceeds will be used to scale up Delhi-based Capital India Home Loans that the company acquired in October,” one of the people cited above said.
While Paragon and Weaver did not respond, Premji declined Mint’s requests for a comment.
Set up by Satrajit Bhattacharya, former head of investments and M&A at HDFC, and other former HDFC executives, Weaver is raising about ₹800 crore from private equity players like Gaja Capital and Lok Capital to fund the acquisition and grow its lending business. The acquisition, however, is yet to receive regulatory approval, the company said in a statement in October.
Over the last few years, housing finance companies, especially those within the affordable segment, have attracted increased interest from investors who perceive them as less risky assets.
The affordable segment typically caters to the underserved category of low-income or mid-income customers who may be salaried, work in the informal sector, or are self-employed and run a small business.
While private equity players have been active in this space, venture capital firms have begun to realise the sector’s potential owing to its promising growth prospects. Earlier this month, Prosus, which typically invests in tech startups, made its first $100 million investment in Vastu Housing Finance.
In 2024, housing finance companies saw a 10-fold increase in primary fundraising to $826.8 million compared to $82.6 million, as per data from Tracxn.
Also Read: Former HDFC employees set up affordable housing finance firm Weaver Services
Meanwhile, Weaver will focus on launching innovative home loan products for women borrowers and self-employed individuals in the unorganised sector from the Tier 2 and Tier 3 towns.
Capital India Home Loans is a subsidiary of Capital India Finance Ltd (CIFL), a non-deposit taking non-banking financial company, which is focussed on loan against property. CIFL is part of Capital India Corp. Pvt. Ltd, promoted by Sumit K. Narvar, who is also the chairman of Noida-based real estate company Trident Realty.
Capital India Finance is a core investment company (CIC) which also includes RemitX, a tech-enabled cross-border remittance player, and RapiPay, a fintech payment and money-transfer startup, Credenc, an education loan fintech and Kuants, an investment platform.
Broadly, the housing finance sector has witnessed consolidation with major buyouts such as New York-based private equity firm Warburg Pincus’s ₹4,630 crore acquisition of Shriram Housing Finance Ltd in May for equity and convertible instruments and EQT’s 100% acquisition of Indostar Home Finance for ₹1,750 crore in September.
Also Read: Warbug Pincus to pare stake in Home First before acquiring Shriram Housing
It also saw some of the most prominent initial public offerings this year. Bajaj Housing Finance, part of the esteemed Bajaj Group– a leading Indian conglomerate with a diverse portfolio, went public in September with an issue size of ₹6,560 crore while Aadhar Housing Finance had a ₹3,000 crore public issue in May.
Also Read: Bajaj Housing Finance business model risk is low, but valuation risk is high
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