Mumbai stands at the forefront of an exciting development in the housing finance sector as Unity Small Finance Bank (SFB) emerges as the leading contender for Aviom India Housing Finance. The Bank has made a significant bid of ₹775 crore in cash, positioning itself as a strong contender amidst a competitive landscape. This transaction has garnered substantial attention from various financial institutions and investors, highlighting the growing interest in housing finance within India.
In addition to Unity SFB, several other players are actively participating in this bidding process. Notable contenders include Authum Investment and Infrastructure, Northern Arc, DMI Housing, Kifs Housing Finance, and Omkara Asset Reconstruction Company. Authum has placed an offer of ₹750 crore, which includes ₹450 crore upfront with the balance to be paid over two years. Meanwhile, Northern Arc's bid stands at ₹625 crore, comprising ₹325 crore upfront, with the remainder similarly staggered.
The interest in Aviom India Housing Finance is robust, mainly due to its secured loan book. A senior official advising one of the bidders stated, "There is enormous interest among bidders partly because the entire loan book is secured. There is ₹300 crore cash in the company and bad loans are fully provided." This security makes the asset particularly attractive to potential investors, who are keen on both financial returns and achieving social objectives through impact investing.
The current climate in the housing finance sector indicates a surge of activity, with private equity investors actively seeking opportunities. Recent acquisitions in the market, such as Blackstone's 80% stake in Aadhar Housing Finance and Warburg Pincus' 84% stake in Shriram Housing Finance, signal a trend of increasing valuations and interest in housing finance companies. A senior official noted that given the heightened interest, bids could potentially exceed four-digit figures as more investors express a desire to participate in the bidding process.
As the bidding progresses, the role of impact investing in financing assets that align with social goals becomes increasingly evident. The Reserve Provider (RP) has already received 18 compliant Expressions of Interest (EoIs), with six of these offering substantial bids. This competitive environment underscores the significance of Aviom's assets and the potential for lucrative returns in the housing finance sector.