TVS Holdings to acquire majority stake in Home Credit India for ₹554 crore

Mumbai: TVS Holdings Ltd will acquire a 80.74% stake in Gurugram-based Home Credit India Finance Pvt. Ltd for ₹554 crore, while Premji Invest, and its associates, will pick up the remaining 19.26% equity for another ₹132 crore.

According to a company statement, the transaction is subject to approvals from the Competition Commission of India, and the Reserve Bank of India.

JM Financial acted as the financial advisor to Home Credit India Finance, while Khaitan & Co. was the legal advisor for the transaction.

According to the company's stock exchange filing, the board of directors, at a meeting held on Friday, approved the acquisition of 880.9 million shares of Home Credit India Finance from Home Credit India B.V and Home Credit International A.S.

Home Credit India, part of the global Home Credit Group, is a non-banking financial institution founded in 1997 in the Czech Republic and headquartered in the Netherlands.

According to Sudarshan Venu, managing director, TVS Holdings, financial services represent a huge opportunity for penetration, and digital infrastructure will facilitate India's consumption and investment story, going forward.

“That's why, at TVS holdings and at the group level, we are doubling down on our investments. We are looking forward to capitalising on the opportunity that this presents to establish a ₹50,000 crore book in the next three years between TVS credit and Home Credit India. Currently, we have a book of ₹32,000 crore, which we seek to grow.”

With assets under management (AUM) of ₹5535 crore, Home Credit India has a customer base of 1.6 crore, both online and offline. Besides personal loans, it offers consumer durable loans to new-to-credit customers. Its employee count is around 3,800, and has a network of over 50,000 points-of-sale across over 625 cities in India.

TVS Holdings holds around 92% stake in another NBFC TV Credit, which has an AUM of ₹25,900 crore, and is growing at a compound annual rate of 25% since FY19. It carters to over 14 million customers.

Venu said the company does not plan to merge the two businesses for now, but may look at it in future.

“Home Credit focuses on a particular new-to-credit customer base with smaller ticket loans and stronger distribution in certain states. So, the focus on this unique customer segment, brand and distribution is something we would like to retain going forward." 

"But, at the same time, I think there will be a lot of synergies in terms of collections, digital and tech stack cost reduction and processor opportunities as well,” Venu said.

The parent company could also look at cross selling products of TVS Credit, which is primarily into two-wheeler, consumer, and gold loans, he added.