EQT, a private equity firm announced that the BPEA Mid-Market Growth Partnership (or the MMG fund) has agreed to acquire 100% stake in Indostar Home Finance, a wholly owned subsidiary of Indostar Capital Finance for ₹1,750 crore ($210 million).
The MMG fund will also invest ₹500 crore of primary capital in Indostar Home Finance to support its next growth phase. EQT aims to expand the Company’s geographic footprint and accelerate its digital transformation journey by leveraging EQT’s in-house digitalization expertise, network of seasoned industry advisors, and expertise in go-to-market strategies.
Founded in 2017, Indostar Home Finance provides affordable mortgages to retail customers in tier 2 to tier 4 cities in India and has supported over 39,000 low-income homeowners and small businesses.
The Company has rapidly scaled to more than ₹24 billion in assets under management and achieved a 32% compounded annual growth in the last three years. Indostar Home Finance has a network of more than 130 branches spread across nine states and employs over 1,000 people.
The Indian housing finance market currently stands at more than ₹30 trillion, according to the CRISIL. The segment has recorded strong growth driven by government support, rising affordability, and urbanization. However, there remains a significant shortage of housing in the country, with India’s mortgage-to-GDP ratio at 12.3% compared to more than 60% for developed countries like the USA and UK.
Ashish Agrawal, Partner in the EQT Private Capital Asia advisory team, said, “Retail lending is a key investment theme for EQT within financial services in India. Building on our investment in the education finance sector through HDFC Credila last year, we are thrilled to welcome Indostar Home Finance to our portfolio. India’s affordable housing finance sector represents a long-term growth opportunity supported by secular demand drivers, favorable government policies and resilient asset quality across economic cycles.”
Hemant Sharma, Managing Director in the EQT Private Capital Asia advisory team, said, “Indostar Home Finance has established itself as a leading player in this segment and is well-positioned for continued growth. We are impressed by its market-leading position in South India and strong underwriting capabilities. We see significant potential to expand Indostar’s presence across India and drive its digital transformation. EQT looks forward to supporting the company in its next phase of growth.”
Shreejit Menon, CEO of Indostar Home Finance, said, “This transaction marks a key milestone for Indostar Home Finance. We are excited to embark on this new journey with EQT, who shares our vision and whose partnership will significantly help advance our mission of delivering affordable housing finance solutions across India. With EQT’s support and global expertise, we are well-positioned for accelerated growth and success.”
