Motilal Oswal Group Plans Exit from Home Finance Business: What's Behind the Move?

In a bold strategic shift, Mumbai-based financial services giant Motilal Oswal Group is considering selling its housing finance arm, Motilal Oswal Home Finance (MOHF). Despite denials from the company, sources indicate the group has enlisted Avendus Capital to explore potential buyers.

But what’s driving this decision, and why is affordable housing such a hotspot for investors? Let’s dive deeper.

Key Facts:

History and Scale:

• MOHF, formerly Aspire Home Finance Corp., began in 2014.
• Its loan book stood at ?4,098 crore as of June 2024, with a net worth of ?1,290 crore.

Peer Valuations:

• Affordable housing finance companies like Aavas Financiers trade at 2.8-3.9 times their book value, estimating MOHF’s valuation between ?3,612 crore and ?5,031 crore.

Improved Asset Quality:

• MOHF’s gross non-performing assets (NPAs) dropped from 9.2% in FY19 to 1.3% by September 2024, showcasing significant recovery efforts.

The Big Picture:

The affordable housing finance market in India is a ?13 trillion industry, with housing finance companies (HFCs) owning ?6.9 trillion of the share. Rising urbanization, a growing middle class, and government incentives make it a lucrative segment.

Why Now?

Increased M&A Activity:

Recent deals highlight investor appetite in this space:

• Shriram Finance sold Shriram Housing Finance to Warburg Pincus for ?3,929 crore.
• EQT Partners acquired Indo Star Home Finance.
• CVC Capital Partners invested in Aavas Financiers.

Strategic Rethink: Diversification is key for financial services firms. MOHF adds revenue diversity for Motilal Oswal, but the sale could free up capital for other ventures.

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The affordable housing market is more than just numbers—it’s a story of opportunity, competition, and strategic evolution. The next chapter for MOHF could set a precedent for the sector

Unlisted Share News:

1. Motilal Oswal Explores Housing Finance Sale: Motilal Oswal reportedly plans to sell its 97.49% stake in its housing finance arm, valued at ?3,612-?5,031 crore, amid rising affordable housing deal activity.

2. Bidding War for REL Heats Up: US investor Danny Gaekwad counters the Burmans’ offer for Religare Enterprises with a ?275/share bid, a 17% premium, aiming to acquire a 55% stake.

3. Shiprocket Converts to Public Entity Ahead of 2025 IPO: Logistics platform Shiprocket has rebranded as a public company, aiming to raise ?2,000-2,500 crore through its upcoming IPO.

Financials & Valuation: Shiprocket reported ?1,316 crore in revenue for FY24 with ?595 crore in losses, and has raised over $320 million to date at a valuation of $1.21 billion.

Key Indices Performance:

• Sectoral Indices: All sectors deep in the red.
• Nifty: Drops to a 7-month low, dragged by HCLTech and Tech Mahindra.
• Nifty Midcap & Smallcap: Both tumble to 7-month lows.
• Nifty IT: Snaps 3-day gains; LTIMindtree and Coforge pull it down.
• Nifty Pharma: Slips to a 5-month low; Laurus Labs and Gland Pharma lead losses.
• Nifty Energy: Hits a 1-year low; Indian Oil and Triveni Turbine drag down.
• Nifty Metal: Declines for the 2nd day; Welspun Corporation, Hindustan Copper dip.
• Nifty FMCG: Ends 2-day rally; United Spirits and Radico drag.
• Nifty Auto: Falls to a 9-month low; Exide Industries leads losses.
• Nifty Realty: Drops to a 10-month low; Raymond and Mahindra Life hit hard.
• Nifty Bank: Sinks to a 7-month low; IDFC First Bank and AU Small Finance Bank weigh down.

Top Gainers:

• ICICI Bank: Up 1.55% to ?1,227.95
• Britannia: Up 1.46% to ?5,176.25
• M&M: Up 1.08% to ?2,831.60
• HUL: Up 1.05% to ?2,392.85
• SBI: Up 0.68% to ?749.20

Top Losers:

• SBI Life Insurance: Down 2.65% to ?1,499.70
• Trent: Down 2.04% to ?6,090.00
• Shriram Finance: Down 1.86% to ?516.70
• Adani Ports: Down 1.27% to ?1,148.70
• HDFC Life: Down 1.27% to ?634.05

FII/DII:

IPO Corner: