EQT’s BPEA Mid-Market Growth Partnership fund has agreed to acquire a 100% stake in Indostar Home Finance, an Indian affordable housing finance company, for ₹1,750 crore. This transaction marks a major milestone in the Indian financial services landscape, especially for those looking to invest in stocks tied to the housing finance sector.
Alongside the acquisition, EQT has also committed an additional ₹500 crore to further support the geographic expansion and digital transformation of Indostar Home Finance. This investment underscores EQT’s confidence in India’s growing housing finance market and its long-term potential.
The acquisition and future investments
Indostar Home Finance is a wholly-owned subsidiary of Indostar Capital Finance and was established in 2017 with a focus on providing affordable mortgage solutions to customers in Tier-II to Tier-IV cities. Over the past few years, the company has demonstrated significant growth, achieving a compound annual growth rate (CAGR) of 32% and managing assets worth ₹2,400 crore. This performance, combined with a network of over 130 branches across nine states, makes Indostar Home Finance a key player in India’s affordable housing finance sector. For those aiming to invest in stocks in this sector, this acquisition represents a potential growth opportunity driven by EQT’s strategic involvement and planned future investments.
As part of the deal, EQT’s BPEA Mid-Market Growth Partnership fund will not only acquire the entire stake in Indostar Home Finance but also inject an additional ₹500 crore. This additional capital will be directed toward expanding the company’s geographic footprint and enabling a digital transformation. The aim is to strengthen Indostar Home Finance’s position in the market by leveraging EQT’s global experience and resources.
Growth in the affordable housing market
The Indian housing finance sector has been growing rapidly, supported by government initiatives and policies that promote affordable housing. According to Crisil, the housing finance market in India is valued at ₹30 lakh crore. However, the country’s mortgage-to-GDP ratio stands at 12.3%, which is significantly lower compared to developed markets like the US and the UK, where the ratio is around 60%. This disparity highlights the immense growth potential in the Indian market, especially for those considering options to invest in stocks related to housing finance.
The acquisition comes at a time when the Indian government is pushing for affordable housing, and urbanisation is increasing. Rising affordability and demand in Tier-II and Tier-IV cities are driving growth, and companies like Indostar Home Finance are well-positioned to capitalise on these trends. EQT’s additional investment in the company will further fuel this expansion, creating new opportunities for investors to invest in stocks tied to the Indian financial services and housing sectors.
Indostar’s growth trajectory
Since its inception in 2017, Indostar Home Finance has focused on offering affordable mortgage solutions to retail customers, particularly in smaller towns and cities. The company has served more than 39,000 low-income homeowners and small businesses, helping them access financing for housing and business growth. Over the past few years, Indostar has expanded its reach significantly, establishing over 130 branches in nine states across India.
This acquisition by EQT marks a new chapter for Indostar Home Finance, as the company seeks to build on its impressive growth and continue to expand into new markets. For those looking to invest in stocks in the housing finance sector, Indostar’s strong performance and EQT’s backing provide an exciting prospect.
EQT’s strategic vision
EQT’s acquisition of Indostar Home Finance is part of the company’s broader strategy to expand its presence in the Indian financial services market. Ashish Agrawal, partner at EQT Private Capital Asia, highlighted the importance of India’s affordable housing finance sector as a key investment theme for EQT. He noted that the sector represents a long-term growth opportunity supported by secular demand drivers, favourable government policies, and resilient asset quality across economic cycles.
For investors looking to invest in stocks in the Indian financial services sector, EQT’s involvement signals confidence in the growth potential of affordable housing finance. EQT’s global experience in private equity, combined with Indostar Home Finance’s strong market presence, positions the company to take advantage of India’s growing housing finance market.
Final words
The growing demand for affordable housing, combined with favourable government policies and increasing urbanisation, positions Indostar Home Finance for continued growth. With EQT’s backing, the company is set to expand its geographic footprint and enhance its operations through digital transformation, making it an attractive investment prospect for those seeking to invest in stocks in the housing finance sector.
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