CVC Capital Partners has emerged as the successful bidder for Aavas Financiers, formerly known as AU Housing Finance, on August 10. The formal announcement came on Saturday evening, when CVC outbid rival EQT, according to a stock exchange filing.
The deal marks a significant milestone for current promoters Kedaara Capital and Partners Group, who are set to exit their investment after eight years with an impressive 6x return.
Owning a combined 26.47% stake in Aavas, their exit will trigger an open offer for an additional 26% of shares by public shareholders, potentially leading to a change in control of the company, the document added.
CVC’s winning bid values Aavas at approximately ₹13,019.67 crore, offer ₹1,635 per share. If the public offer is fully subscribed, CVC will acquire a controlling stake of 52.47% in Aavas, with a potential total investment of ₹7,089 crore. This would make it the largest acquisition in the sector to date, surpassing Warburg Pincus’ acquisition of Shriram Finance In May.
The news comes after earlier reports that Kedaara Partners and Partners Group were considering an exit from Aavas Financiers.
Aavas Financiers Share Price Outlook
In related news, financial services firm Nirmal Bang has maintained a buy rating on Aavas Funderssetting a target price of ₹1,775. The firm cited India’s severe housing shortage and low mortgage penetration as key factors supporting growth prospects in the sector.
Nirmal Bang He said “India’s significant housing shortage (demand for 100 million housing units), low mortgage penetration (12.3 per cent of GDP as of FY23), rising per capita income and affordability indicate huge scope for growth over a multi-year horizon.”
Meanwhile, Aavas Financiers recently reported strong financial results for the fourth quarter of 2024. The company saw a 21.41% increase in revenue and a 12.34% increase in profit year-over-year. Compared to the previous quarter, revenue grew by 7.84% and profit increased by 22.07%. The company’s EPS for the fourth quarter stood at ₹18.43, which represents a year-on-year increase of 10.57%.
This acquisition by CVC Capital Partners could potentially reshape the landscape of India’s housing finance sector, signaling continued interest from global investors in the country’s financial services industry.
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