TVS Holdings acquiring 80% stake in Home Credit India Finance for Rs 554 crore

TVS Holdings Ltd recently announced that it is acquiring an 80.74% stake in Home Credit India Finance for Rs 554.06 crore.

The acquisition involves purchasing 88,09,45,401 equity shares from Home Credit India BV, a Netherlands-based entity, and Home Credit International AS from the Czech Republic. 

What does Home Credit India do?

Home Credit India Finance specializes in offering unsecured loans and is a prominent player in consumer financing, particularly in the personal loans market.

For the fiscal year 2022-2023, the company reported a turnover of Rs 1,720 crore. As of March 31, 2024, it operated with an Assets under Management (AUM) of Rs 5,535 crore and employed 3,800 individuals across 625 cities with over 50,000 points of sale.

Why this acquisition?

The acquisition reflects TVS Holdings Ltd's strategy to expand its footprint in the burgeoning consumer finance market.

Sudarshan Venu, the Managing Director of TVS Holdings, emphasized the potential in financial services within India, highlighting the country's rapid growth and digital infrastructure advancements.

"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," Venu stated, outlining the goal to reach a lending book size of Rs 50,000 crore in three years.

Regulatory approvals and future plans

The acquisition is pending approval from the Reserve Bank of India, which is necessary for changes in control and board of directors. Additionally, TVS Holdings will obtain clearance from the Competition Commission of India under the Competition Act, 2002.

Notably, Sudarshan Venu clarified during a virtual conference that there are no plans to merge Home Credit with TVS Credit in the near future.

Participation of other investors

Besides TVS Holdings, Premji Invest, along with other associates, will acquire the remaining 19.26% stake, bringing the total transaction value to Rs 686 crore. Premji Invest will hold about 11% of the stake.

TK Kurien, managing partner and chief investment officer at Premji Invest, expressed confidence in the acquisition, stating, "We are confident this acquisition will help the company accelerate scale and profitability and build significant value for all stakeholders."

The acquisition is aimed at enhancing TVS Holdings' capabilities and reach in the financial sector, serving an extended customer base across more than 90,000 touchpoints nationwide.