Motilal Oswal Considers Selling Home Finance Subsidiary
Mumbai-based financial services group Motilal Oswal is exploring the sale of its home finance arm, Motilal Oswal Home Finance, which started operations in 2014 as Aspire Home Finance Corp. and has a loan book of ₹4,098 crore.
Motilal OswalHome FinanceAffordable HousingSale Of BusinessFinancial ServicesReal Estate NewsJan 26, 2025
According to three people familiar with the matter, the group has appointed investment bank Avendus Capital to find potential buyers.
However, a spokesperson for MOHF denied the move, stating that there is no such development and that the company continually evaluates various business opportunities as part of ongoing strategic efforts.
The affordable housing finance sector has seen a significant increase in deal activity in recent months, with private equity investors showing keen interest.
This backdrop has likely influenced Motilal Oswal's decision to explore a sale.
Motilal Oswal Financial Services Ltd, the group’s holding company, along with other wholly owned subsidiaries, currently holds a 97.49% stake in MOHF.
As of March 31, 2024, Moilal Oswal’s housing finance business had a standalone net worth of ₹1,290 crore.
Based on peer valuations, the company could be valued between ₹3,612 crore and ₹5,031 crore.
Peers such as Aadhar Housing Finance, Aavas Financiers, Aptus Value Housing Finance India, and Home First Finance Company are trading at 2.8-3.9 times their book value or net worth.
MOHF started operations in 2014 as Aspire Home Finance Corp.
and was renamed in 2019.
As of June 30, 2024, it had a loan book of ₹4,098 crore, up slightly from ₹4,048 crore on March 31, 2024.
The company has faced asset quality issues in the past, with gross non-performing assets (NPAs) rising to 9.2% of loans in FY19.
However, the situation has improved, with the gross NPA ratio dropping to 1.3% as of September 30, 2024, from 2.1% in the same period in 2023.
Crisil Ratings maintains that MOHF is strategically important to Motilal Oswal Financial Services, providing exposure to the housing finance space and diversifying the group’s revenue profile.
In September 2024, Crisil revised its outlook on MOHF's non-convertible debentures to positive from stable.
The decision to put the business on the block aligns with the growing interest from private equity investors in affordable housing.
For instance, Shriram Finance sold its 84.44% stake in Shriram Housing Finance to Warburg’s affiliate, Mango Crest Investment, for ₹3,929 crore in December 2024.
EQT Partners also acquired 100% of Indo Star Home Finance in September 2024, while CVC Capital Partners took a 26.47% stake in Aavas Financiers, triggering an open offer.
The affordable housing segment is expected to remain a bright spot, driven by rapid urbanization, increasing migration to cities, and a growing middle class.
Non-banking financial companies (HFCs) are particularly attracted to this segment due to limited penetration by large banks, which allows them to generate attractive risk-adjusted yields.
Prakash Agarwal, a partner at Gefion Capital Advisors, believes the outlook for the sector remains positive, with significant growth potential and regulatory support.
The affordable housing loan market in India is estimated at ₹13 trillion, with HFCs holding ₹6.9 trillion and banks ₹6.2 trillion, according to data from the National Housing Bank.
This market size and the regulatory support make the sector highly attractive to investors looking for long-term prospects and strong visibility.
Frequently Asked Questions
What is Motilal Oswal Home Finance?
Motilal Oswal Home Finance is a subsidiary of the financial services group Motilal Oswal. It started operations in 2014 as Aspire Home Finance Corp. and was renamed in 2019.
Why is Motilal Oswal considering selling its home finance arm?
Motilal Oswal is reportedly considering the sale due to increased deal activity in the affordable housing space and potential interest from private equity investors.
What is the estimated value of Motilal Oswal Home Finance?
Based on peer valuations, Motilal Oswal Home Finance could be valued between ₹3,612 crore and ₹5,031 crore, with a standalone net worth of ₹1,290 crore as of March 31, 2024.
What are the key factors driving the affordable housing segment in India?
Key factors include rapid urbanization, increasing migration to cities, a growing middle class, limited penetration by large banks, and regulatory support.
What is the size of the affordable housing loan market in India?
The affordable housing loan market in India is estimated at ₹13 trillion, with HFCs holding ₹6.9 trillion and banks having a share of ₹6.2 trillion.
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