HDFC Stock In Focus: BPEA EQT Acquires 90% Stake In HDFC Credila

A majority stake in HDFC Credila will be sold to an investor consortium made out by BPEA EQT and ChrysCapital, according to a Monday announcement from HDFC Limited, HDFC Bank Limited, and HDFC Credila Financial Services Limited. A deal has been inked selling 132,949,207 equity shares, or 90% stake of HDFC Credila, to a group of investors led by BPEA EQT and ChrysCapital.

The group has assigned HDFC Credila a pre-money value of INR 10,350 crores and plans to inject INR 2,000 crores in primary proceeds into the company. HDFC Limited would keep a 9.99% stake in HDFC Credila as part of its investment.

Mr. Keki Mistry, CEO, HDFC Limited, said, "We are delighted to have reputed investors like BPEA EQT and ChrysCapital in HDFC Credila. The company has built an impressive position in the education financing market in India and has continued to maintain a very high asset quality. We believe the business is well positioned to continue its strong growth momentum under its new shareholders."

Mrs. Renu Sud Karnad, Managing Director, HDFC Limited said, "We look forward to having BPEA EQT and ChrysCapital as our partners in HDFC Credila. We have nurtured HDFC Credila's business so far and will take the company through the next phase of growth together with the new shareholders. HDFC Credila has established a strong position in the education financing market. We are proud of the company's performance and wish to see it achieve greater heights."

Mr. V Srinivasa Rangan, Executive Director, HDFC Limited and Chairman, HDFC Credila Financial Services Ltd., said, "We welcome BPEA EQT and ChrysCapital as our partners in HDFC Credila. We look forward to having their valuable support as the company continues to target the large market opportunity in the education financing space while maintaining a high‐quality book delivering profitable growth."

Mr. Jimmy Mahtani, Partner and Head of BPEA EQT India, commented, "The demand in India for obtaining a higher education is growing at a faster pace than ever, accelerated by our country's growing middle class and students' strive for better career opportunities. Coming out of HDFC Group, one of India's most respected and well‐established financial conglomerates, HDFC Credila plays a critical part in serving this demand.

We have been following HDFC Credila for several years and we are excited to partner with its strong management team led by Arijit Sanyal. We also welcome HDFC Group's decision to retain a 9.99% stake in the business and we see their continued support as a testament to our vision for the company. Looking ahead, BPEA EQT plans to accelerate HDFC Credila's digital transformation and invest significantly in the Company's continued growth."

Mr. Sanjay Kukreja, CIO ChrysCapital said "ChrysCapital is excited to partner with BPEA EQT and help support HDFC Credila in its next leg of growth. Higher education finance is an attractive space with long term tailwinds, and we believe HDFC Credila being a strong market player is well positioned to capitalize on the growth momentum and deliver strong outcomes for all stakeholders under the stewardship of Arijit Sanyal, MD and CEO and the broader management team" Mr. Aashish Agarwal, Country Head, Jefferies India said, "The higher education financing market in India represents a massive opportunity.

HDFC Credila's management team led by CEO Arijit Sanyal, under guidance of the Board, has built a leading position in the segment. We believe backing from the marquee investor consortium comprising BPEA EQT and ChryCapital will propel the business into its next leg of growth and create significant shareholder value."

In accordance with the deal that is being discussed, HDFC's stake in HDFC Credila will go down to less than 10% of the company's total issued and paid-up share capital, and HDFC Credila will no longer be a subsidiary of the Corporation. HDFC currently holds a fully paid up equity share or 100% stake in HDFC Credila.

On April 21, 2023, RBI had inter alia advised that shareholding in HDFC Credila Financial Services Limited (a wholly owned subsidiary of HDFC Limited) be brought down to 10% within two years.

HDFC said in a statement that it "has executed definitive documents on June 19, 2023 for proposed disinvestment/ sale of approximately 13,29,49,207 equity shares of HDFC Credila representing approximately 90% of HDFC Credila's total issued and paid-up share capital as on date, to the Acquirers..., subject to regulatory approvals and dispensations."

In a regulatory filing dated 19th June 2023, HDFC said Kopvoorn B.V., Moss Investments Limited, Defati Investments Holding B.V. and Infinity Partners will acquire approximately 132.9 million shares of HDFC Credila and the acquirers are not belong to the promoter or promoter group of companies.

Gaurav Bissa, VP, InCred Equities said "HDFC AMC witnessed intense pressure since September 2021 with prices falling from 3150 to 1700. During this while it was seen forming lower highs and lower lows which is a characteristic of a downtrend. However, the stock has recently taken support from a descending channel pattern on the weekly charts and bounced swiftly from 1600 to 2000 levels. The stock is showing early signs of double bottom formation on the weekly charts suggesting a multiyear upside can be seen if it holds above the previous swing lows. Also, the stock is giving a breakout from descending trendline pattern on the weekly charts which will get confirmed on a weekly close above 2050 levels which can push the stock towards the neckline of double bottom pattern placed at 2300."