Warburg Pincus Plans To Invest INR 700 Cr In Home First Finance

Mumbai-based real estate and lending tech company Home First Finance Company (HFFC) has entered into a definitive agreement with Orange Clove Investments BV (an affiliate of Warburg Pincus LLC) for an investment of INR 700 Cr.  

Founded in 2010, HFFC has established its presence in 60 districts across 11 states in a span of 10 years. The company provides home loans to customers from low and middle-income segments.  

HFFC reported a profit after tax (PAT) of INR 45.20 Cr for the year ended March 2019, up from INR 15.99 Cr for FY18. It has gross loan assets of INR 3,113 Cr. The company has planned for an IPO in March 2021.

“Warburg Pincus’ investment in Home First at this juncture is an acknowledgment of Home First’s inherent strengths,” said Home First CEO Manoj Viswanathan.

Warburg Pincus joins existing PE shareholders True North and Bessemer Venture Partners.

According to a Moneycontrol report, US-based Warburg Pincus is going to pick up a 25% stake in the Home First Finance Company.

“Home First has had a remarkable journey to become a leading affordable housing finance company in a relatively short span of 10 years. It is helmed by a very talented team and robust operating processes that continue to steer the company to do well through the pandemic and to leverage the growth potential of the affordable segment. Warburg Pincus looks forward to the partnership with True North and towards backing Manoj and the management team in its next phase of expansion,” Narendra Ostawal, Managing Director, Warburg Pincus said.

So far, Warburg has raised around 19 private equity funds, which have invested more than $79 Bn in more than 880 companies in more than 40 countries. In India, affiliates of private equity funds raised by Warburg Pincus have invested more than $4 Bn in about 50 Indian companies.

Besides Home Finance, there are other players in the market which include Easy Home Finance, Better.com,  BPI Direct BanKo, Capital Bank, AIB and Dubai First.

As per Inc42 Plus estimates, the credit demand in India is projected to be worth $1.41 Tn by 2022. The estimated growth rate in credit demand is 3.73% between FY17 and FY22. However, the Covid-19 crisis has changed the entire ballgame for digital lenders.

KYC verification, underwriting, and collection are primary events that the lending industry will strive to digitise in the near future. In particular, digital lenders will have to plan for a significant drop in borrower ability to repay due to potential job losses and loss of business. In such scenarios, restructuring of dues and settlement strategies will play an important role.