BPEA EQT, formerly known as Baring Private Equity Asia, has emerged as the frontrunner to acquire a majority share in Credila Financial Services Ltd, the education lending subsidiary of Housing Development Finance Corporation (HDFC), for up to $1.5 billion (Rs. 12,000 crore).
The Asian buyout fund will likely jargon rival bidders, which include Carlyle, Blackstone, TA Associates, and CVC Capital, to finalise the deal, two people aware of the development plan confirmed to VCCircle media.
The deal is nearing completion and will most likely be disclosed in June, ahead of the big merger between HDFC and HDFC Bank.
Previously this month, VCCircle reported exclusively that several strategic players, including large private equity firms such as Warburg Pincus, Blackstone and sovereign wealth funds such as Singapore’s GIC and Abu Dhabi Investment Authority (ADIA), had expressed their interest in obtaining a stake in Credila.
According to the people listed above, BPEA EQT would likely buy 90% of the education financing firm in a combination with Indian private equity firms ChrysCapital and Faering Capital. HDFC will keep roughly 10% of the share, which will be sold over a two-year period, the firm stated.
“A couple of additional funds are likely to come on board given the size of the deal. The group has one week exclusively to expedite the closure. The legal and documentation process may take some more days,” a person well aware of the theorem said.
However, emails sent to HDFC and BPEA EQT did not immediately receive a response.
Founded in 1997 as Baring Private Equity Asia, the PE firm has assets under management (AUM) of over $22 billion.
BPEA is currently investing from its $11.2 billion BPEA Fund VIII, which was raised last year with an emphasis on Asia mergers.
Earlier this week, Moneycontrol first reported that BPEA EQT had been revealed as the forerunner for the deal.
Moreover, HDFC had also picked Jefferies Financial Group Inc. to manage the sale of Credila, among the largest education loan monetary firms in India, and might gain a value ranging between $1 and 1.5 billion, which has been estimated at ₹8,100- ₹12,000 crore.
Keki Mistry, HDFC’s vice chairman and chief executive officer, announced in April that the company had received multiple bids for a stake sale in its wholly owned education loan business.
HDFC’s efforts to sell a stake in Credila had been stalled for several years as it awaited clarity from the Reserve Bank of India (RBI) on the mega merger.
Credila Financial Services was founded by brothers Anil and Ajay Bohora, as a dedicated education loan financier in 2006.
A year later, DSP Merrill Lynch also planned to buy 40% of the lender’s equity. However, after DSP Merrill Lynch got backed by Bank of America, HDFC purchased the stake held by DSP Merrill Lynch in Credila in 2009.
Thereafter, the Bohora brothers exited HDFC Credila in December 2019, with HDFC obtaining their 9.12% ownership, which is estimated at around ₹395 crore ($56 million), listing HDFC Credila at $614 million, which is around ₹4,331 crore.
- Published By Team Genuine Reporter