Morgan Stanley will invest Rs 190 Rs in Centrum Housing Finance
MUMBAI: the private equity arm of Morgan Stanley will invest Rs 190 million rupees in a significant minority interest. This will be the first external institutional investment in Centrum Housing.
Centrum Housing will use the money to expand its operations, including entry to new geographies.
The fact that we have been able to attract investments of a caliber fund at an early stage is a testament to the strength of the company's business model, said Centrum Housing CEO Sanjay Shukla.
Established in 2017, Centrum Housing offers financing to people who buy or build apartments in the affordable housing space. So far it has disbursed Rs 500 million through its 36 branches to 3,500 customers.
Morgan Stanley will get a 20% stake in Centrum Housingfor its Rs 190-crore investment, valuing the non-banking finance company (NBFC) at Rs 950 crore. TOI had reported about the impending transaction in its January 13 edition. The other shareholders of Centrum Housing are the listed Centrum Capital and promoters of Centrum Capital including chairman Jaspal Bindra.
Centrum Housing will be Morgan Stanley’s fourth investment in India’s retail-lending space. The US financial services giant’s other investments are Janalakshmi Financial Services, Five Star Business Finance and Kogta Financial. Affordable housing has been witnessing growth traction on the back of government schemes like housing for homeless citizens, subsidy on home loan rates and reduction in stamp duty. The government through Budget 2020-21 has also extended the date of availing home loan under affordable housing scheme till March 31, 2021 from the current March 31, 2020.
However, industry experts believe that the elimination of income tax exemptions for people earning up to Rs 15 lakh in capital and interest for mortgage loans would be a buffer for the sector.
Morgan Stanley’s investment in Centrum Housing is in line with the sectoral trend that saw General Atlantic putting Rs 926 crore in PNB Housing Finance for a 6.5% stake and Blackstone investing Rs 2,200 crore for a 98% interest in Aadhar Housing Finance.