Dewan Housing in talks to buy Andromeda for up to Rs250 crore
The Andromeda acquisition will help Dewan expand its reach to smaller cities
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Mumbai: Dewan Housing Finance Ltd is in talks to acquire Andromeda Sales and Distribution Pvt. Ltd, one of the largest distributors of loans, mortgage, financing and financial instruments in India, said two persons familiar with the development who asked not to be identified.
The Mumbai-based financial services holding company Casa Capital Management Ltd holds about 80% stake in Andromeda. The deal size is pegged at Rs.200 -250 crore, one of the two persons said. Both added that the talks are at an advanced stage.
Altamount Capital Management Pvt. Ltd is advising Casa Capital on the sale.
“On behalf of its clients, Altamount Capital is in discussions with a few strategic Investors on the acquisition of Andromeda,” said Richa Karpe, director, Altamount Capital. She declined to comment on the valuation or the identity of the potential buyers.
A Dewan Housing spokesperson did not respond to mails, calls and text messages seeking comment.
Sunil Pophale, director at Casa Capital Management, did not respond to text messages and calls seeking comment.
V. Swaminathan, chief executive officer at Andromeda Loans, did not respond to queries.
The Andromeda acquisition will help Dewan expand its reach to smaller cities, the first person quoted above said.
Andromeda Group, acquired by the Malaysian venture capital fund Navis Capital in 2007 for Rs.180 crore, was sold to Casa Capital in 2012 after carving out the loan distribution business.
Started as a direct sales associate for Citibank NA in 1991 by V. Swaminathan, Andromeda currently operates across 16 cities and has facilitated the disbursal of loans worth more than Rs.5,000 crore, according to its website.
Andromeda mostly operates through its website andromedaloans.com, and distributes credit cards, mortgages, unsecured business loans and car loans. Andromeda has partnered with 35 banks and financial institutions, the website adds.
In 2015, Andromeda acquired financial products comparison website Apnapaisa.com in a stock and cash deal.
Andromeda competes with other online aggregators such as BankBazaar and LoanAdda.
BankBazaar boasts of more than 9 million visitors per month and offer 11 financial products across 85 financial brands. LoanAdda provides products of 40 banking partners.
Private equity and venture capital investors have shown a lot of interest in the space.
Last year, A&A Dukaan Financial Services Pvt. Ltd, operator of BankBazaar.com, raised Rs.375 crore from investors led by Amazon.com Inc., Fidelity Growth Partners, Mousse Partners Ltd and existing investors Sequoia Capital and Walden International. Another online distributor Policybazaar.com raised Rs.300 crore from PremjiInvest, Steadview Capital and existing investors Tiger Global Management and Ribbit Capital last year.
In January, online insurance policy aggregator easypolicy.com raised Rs.15 crore in a first of funding led by Ronnie Screwvala’s Unilazer Ventures.
“Financial services distribution businesses have seen quite a few transactions in recent times.Technology has changed the way distribution of financial products happens and specific data analytics are used to map investment patterns. In that context, platforms which use technology in the distribution process have significant value,” said Sanjeev Krishan, partner and leader for private equity and transaction services practice at PwC.
According to start-up tracker Tracxn Technologies Pvt. Ltd, out of the total 163 online financial service aggregators, 76 firms were launched in 2015 and 11 were launched this year.
BankBazaar, the pioneer in online lending, has the largest monthly visitors of 9.1 million (1 February to 29 March ), followed by PaisaBazaar (part of PolicyBazaar.com) with 3.3 lakh monthly visitors, Deal4Loans with 2.5 lakh monthly visitors, RupeePower with 1.8 lakh monthly visitors and ApnaPaisa (acquired by Andromeda) with 1.4 million monthly visitors, according to Tracxn.
Dewan reported a 16.4% rise in net profit to Rs.186 crore for the third quarter ended December, 2015 on higher loan disbursements. Its total income increased to Rs.1,885 crore from Rs.1,525 crore. The loan disbursement of the company for the quarter also rose by 31% to Rs 6,428.37 crore. As on 31 December, Dewan had a total loan book of around Rs.59,000 crore. The company posted a revenue of Rs.5981 crore for FY15.
On Thursday, shares of DHFL fell 0.63% to Rs.205.25 each on BSE.
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