Shriram Housing Finance Ltd (SHFL) expects to scale up its assets under management (AUM) about 2.5 times to ₹20,000 crore by March-end 2025, mainly through the organic route and strategic acquisitions that would add scale. Its AUM was at ₹8,047 crore as of March-end 2023,
The affordable housing company’s MD & CEO Ravi Subramanian observed that the company has reached a size where smaller acquisitions have stopped making sense.
“There were a couple of players (housing finance companies) who were looking at selling their business (about two years back), which was a great opportunity for us. But we are in the land of greedy people,” Ravi said even as he underscored that sellers (HFC promoters) want a valuation which is unsustainable.
In an interaction with businessline, the SHFL chief said that at ₹2,000-2,500 crore AUM, acquiring another company with ₹2,000 crore AUM made sense as it would have doubled the AUM.
“Now, if you look at our growth…in July we’ll be at ₹10,000 crore AUM. At this AUM, there’s no point in buying an HFC with ₹2,000 crore AUM…So why will we pay 3 or 4 times the book value or a premium to buy another HFC when we have the best business model?” Ravi said.
Loan disbursal
At the current loan disbursal run rate, SHFL will be way ahead of the competition in terms of disbursals in FY24, he added.
The company, which expects to reach an AUM of ₹14,000 crore by March-end 2024, added ₹1,000 crore to its AUM in the January-March 2024 quarter.
“So we’re keeping our eyes open if something good comes our way at a reasonable price. If a transaction comes to us at an attractive price, we will be happy to look at it. There are enough people waiting in the wings to support us to buy. The Shriram group is willing to support us for an acquisition and even external funding is available. But it has to be at the right price,” Ravi said.
Shriram Finance Ltd holds 85 per cent stake in SHFL, with the balance 15 per cent being held by San Francisco-based Valiant Capital Management, L.P.