Baring EQT set to buy HDFC's education loan unit for up to $1.5 billion
2 min read 29 May 2023, 10:24 AM ISTThe Asian buyout fund will likely pip rival bidders, including Blackstone, Carlyle, TA Associates, and CVC Capital to clinch the deal
PremiumBPEA EQT (formerly Baring Private Equity Asia) has emerged as the frontrunner to acquire a majority stake in Credila Financial Services Ltd, the education loan unit of Housing Development Finance Corporation (HDFC), for as much as $1.5 billion ( ₹12,000 crore).
The Asian buyout fund will likely pip rival bidders, including Blackstone, Carlyle, TA Associates, and CVC Capital to clinch the deal, two people aware of the development confirmed to VCCircle.
The deal is in the final stages and is likely to be announced in June, ahead of the mega merger between HDFC and HDFC Bank.
Earlier this month, VCCircle reported exclusively that several strategic players, as well as large private equity firms such as Blackstone, Warburg Pincus, and sovereign wealth funds such as Abu Dhabi Investment Authority (ADIA) and Singapore’s GIC, had expressed interest in acquiring a stake in Credila.
BPEA EQT, in a consortium with Indian PE firm ChrysCapital and Faering Capital, will likely acquire 90% of the education financing firm, the people cited above said. HDFC will retain about 10% stake, which may be sold over a two-year period, they said.
"A couple of additional funds are likely to come on board given the size of the deal. The Group has one week exclusively to expedite the closure. The legal and documentation process may take some more days," one of the persons added.
Emails sent to HDFC and BPEA EQT did not immediately receive a response.
Founded in Asia in 1997 as Baring Private Equity Asia, the PE firm has over $22 billion of assets under management (AUM).
Presently, BPEA is investing out of its $11.2 billion fund, BPEA Fund VIII, raised last year with a focus on Asia buyouts.
A week ago, Moneycontrol had first reported that BPEA EQT had emerged as the frontrunner for the deal.
Previously, HDFC had picked Jefferies Financial Group Inc to manage the sale of Credila, among the largest education loan financing companies in India, and could seek a value ranging between $1-1.5 billion (around ₹8,100- ₹12,000 crore).
In April, Keki Mistry, the vice-chairman and chief executive officer of HDFC, said the company had received several bids for a stake sale in the wholly-owned education loan subsidiary.
HDFC’s talks to sell a stake in Credila over the past years were put on hold since it was awaiting clarity from the Reserve Bank of India (RBI) on the mega merger.
Brothers Anil and Ajay Bohora founded Credila Financial Services as a dedicated education loan financier in 2006.
A year later, DSP Merrill Lynch invested to buy 40% equity in the lender. After DSP Merrill Lynch got acquired by Bank of America, HDFC bought the stake held by DSP Merrill Lynch in Credila in 2009.
The Bohora brothers exited HDFC Credila in December 2019 with HDFC acquiring their 9.12% ownership for around ₹395 crore ($56 million), valuing HDFC Credila at $614 million (around ₹4,331 crore).
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