Motilal Oswal to Exit Home Finance Business, Put Subsidiary on Block
Mumbai, 28 January 2025: Mumbai-based financial services group Motilal Oswal is looking to exit its home finance business after appointing investment bank Avendus Capital to look for potential buyers of its housing finance subsidiary.
The decision comes amid increased deal activity in the affordable housing space over the past few months, with private equity investors and primary markets showing keen interest. The move is seen as a strategic step to strengthen Motilal Oswal's financial position and focus on growth areas within the group.
According to sources, the holding company of Motilal Oswal Financial Services Ltd holds 97.49% stake in the housing finance subsidiary, Motilal Oswal Home Finance. The stake may fetch between ₹3,612 crore and ₹5,031 crore, according to peer valuation calculations based on data from Crisil.
Motilal Oswal Home Finance started operations in 2014 as Aspire Home Finance Corp. and was renamed to Motilal Oswal Home Finance in 2019. The lender has had its share of asset quality troubles in the past but has since improved, with a gross NPA ratio of 1.3% as on 30 September 2024.
Industry experts believe that the affordable housing segment is a bright spot, supported by rapid urbanization, increasing migration to cities, and a growing middle class. They say that the sector will continue to attract significant capital due to its high growth prospects and regulatory support.
Crisil Ratings believes that Motilal Oswal Home Finance remains strategically important to Motilal Oswal Financial Services as it gives the group exposure to the housing finance space and imparts diversity to its revenue profile.
However, a spokesperson for Motilal Oswal Home Finance denied the move, stating that there is no such development regarding the sale of the business. The company has expressed ongoing strategic efforts and will communicate any relevant updates if there are any specific developments in future.
The decision to sell may come as a surprise to investors and analysts who have closely followed the group's financial performance. They may be watching the situation closely to see how Motilal Oswal Financial Services handles this move and its impact on the group's overall strategy.