BPEA Expands Footprint In Education Finance: Snaps Up HDFC’s Loan Unit For $1.5 Billion
Sale was accelerated in response to RBI directives to either sell the company or combine it with HDFC before completing their merger by July.
For as much as $1.5 billion which is close to 12,000 crores BPEA EQT (previously Baring Private Equity Asia) came out as the front-runner to buy a majority share in Credila Financial Services Company Ltd, the education loan division of Housing Development Finance Corporation (HDFC).
With the housing financing company holding 10 percent of the company that it may sell during two years, the buyout fund will acquire 90% of the business.
Before the massive merger of HDFC Bank with HDFC to establish the fourth-largest bank in the world, an official declaration is anticipated by the end of June.
According to the aforementioned individuals, both sides are finishing up the legal paperwork.
India offers a profitable market for education funding due to its expanding young population and rising demand for high-quality education.
BPEA is aware of this industry’s enormous potential and wants to take advantage of the rising ambitions of Indian students and their households. With the purchase of HDFC Credila.
BPEA is now well-positioned to enter the Indian learning finance market and take advantage of the growing number of students looking for financial aid for higher education.
Earlier this year, HDFC engaged Jefferies to begin a formal sale process. It attempted to liquidate a minority 10-15% ownership in Credila in the past at least three times, but those bids were unsuccessful.
Baring and ChrysCapital have formed a consortium for the deal. It was impossible to contact BPEA EQT for feedback. BPEA EQT, which underwent a $7.5 billion transaction in 2022, rose to the position of the third-largest equity fund group globally.
For its most recent fund, BPEA Funds VIII, which focuses on buyouts in Asia, BPEA raised a total of $11.2 billion in the same year.
The RBI had earlier in April permitted HDFC Bank to hold HDFC’s interest in HDFC Education and Development Services Private Ltd, which manages three educational institutions, for an additional two years after the effective date.
Subject to the stake being reduced to 10% within two years of the effective date and the company not onboarding new clients, HDFC Credila Financial Services Ltd.
What is there in it for BPEA?
By acquiring HDFC Credila, BPEA will have immediate access to the Indian education finance sector and will be able to benefit from the infrastructure and reputation of HDFC Credila.
By making this tactical choice, BPEA can capitalize on a market that is expanding quickly and profit from the rising demand for student loans.
HDFC Credila contributes to the discussion with its broad expertise and knowledge of the Indian educational funding environment.
By utilizing this knowledge, BPEA may streamline processes and modify its services to meet the particular demands of Indian students.
Additionally, BPEA has access to an already-made distribution system thanks to HDFC Credila’s extensive network of partnerships with educational institutions.
With the purchase of HDFC Credila, BPEA can diversify its holdings by entering the education finance market, which has demonstrated resilience and the potential for long-term growth.
By extending its presence outside its current investments in numerous areas, this diversification approach secures BPEA’s long-term prosperity.
Advantages of HDFC Credila
As a member of Baring Private Equity , HDFC Credila has access to more financial resources, allowing it to grow its loan portfolio and meet the rising demand for student loans.
With this assistance, HDFC Credila will be able to improve its lending capacities and provide appealing loan solutions to a bigger consumer base.
Through the company’s extensive network and global presence, HDFC Credila may be able to collaborate and expand internationally.
The affiliation with an established private equity company, such as BPEA, lends credibility and opens access to new markets and collaborations.
Conclusion
The purchase of HDFC Credila by Baring Private Equity underscores the sector’s enormous potential and growing significance for India’s education financing system.
Together, BPEA and HDFC Credila have combined their capabilities, knowledge, and resources to become a formidable force in the field of education financing.
This partnership not only helps both organizations but also promotes the educational objectives of numerous students who need financial aid to accomplish their goals.
With Baring’s support, HDFC Credila is well-positioned to solidify its position as the industry leader, provide cutting-edge loan solutions, and broaden its reach throughout India and beyond.
Proofread & Published By Naveenika Chauhan
