Morgan Stanley PE says invests Rs 190 cr in Centrum Housing Finance

MUMBAI- A private equity fund managed by Morgan Stanley has agreed to invest Rs 190 crore in Centrum Housing Finance Ltd (CHFL), a retail focused housing finance company, as the firm controlled by former Standard Chartered banker Jaspall Bindra looks to expand the middle-income affordable lending business.

The fund managed by Morgan Stanley Private Equity Asia will be the first external institutional investor in CHFL, which is promoted by Centrum Capital Limited, Centrum said in an exchange notification.

ET first reported the potential transaction on Jan 13.

EY acted as exclusive advisor to the deal.

“The Government is taking many steps to boost growth of the affordable housing sector in India. Schemes like the PMAY, reduction in stamp duty and lending rates have given further impetus to the sector. We are excited at partnering with Morgan Stanley and together we will work to grow the business nationally as there is a big opportunity in the low to middle income segment in tier 2 & 3 cities. We will continue to focus and grow in these segments,” said Jaspal Bindra, Executive Chairman, Centrum Group.

“The affordable housing space in India is underpenetrated and offers tremendous opportunity for growth. We believe that CHFL is well-placed in this segment given its strong retail focus, robust underwriting and collection mechanism, and disciplined ALM management,” said Arjun Saigal, Co-Head of Morgan Stanley Private Equity Asia in India.

CHFL, which started operations in 2017, has 36 branches, and is present across 6 states in Central and Western India, serving over 3,500 customers. The Company primarily offers financing to individuals for buying and building houses in the affordable housing segment. The Company has disbursed loans amounting to over INR 500 crore and operates across Gujarat, Madhya Pradesh, Rajasthan, Maharashtra, Chhattisgarh, and Delhi, the statement said.

The transaction will be the fourth investment in India’s retail lending space by funds sponsored by Morgan Stanley Private Equity Asia. Morgan Stanley Asia platform recently made the first close of $366 million for its fifth Asia fund. The investment vehicle, which aims to raise as much as $2 billion eventually, will look at minority investments in sectors such as consumer products, industrial products, financial services, healthcare and telecom and technology. In September 2018, Morgan Stanley CEO James Gorman told ET that it will expand its businesses and invest more capital in India.