Indiabulls Housing Finance buys 40% in UK bank

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MUMBAI: Indiabulls Housing Finance has acquired about 40 per cent stake in UK-based OakNorth Bank for $100 million (Rs 660 crore), making it the lender’s biggest shareholder and aiding its expansion into new business areas overseas.

The bank set up in 2013 by Rishi Khosla, a startup investor, specialises in lending to small businesses.

This is the first time an Indian housing finance company is buying a stake in a UK-based bank.

Indiabulls promoter and chairman Sameer Gehlaut plans to make a personal investment of up to 10 per cent in the bank at the same valuation, subject to regulatory approvals.

Indiabulls Housing Finance was among 26 applicants for a banking licence in India.Only two applicants Bandhan and IDFC eventually got cancer coupleAsub-committee of Indiabulls Housing Finance’s board cleared the stake purchase proposal ahead of Prime Minister Narendra Modi’s visit to the UK.

“We are excited about this new opportunity in the banking sector,” Gehlaut, executive chairman of the Indiabulls Group, told ET. “With this, the total investments of Indiabulls Group in London would exceed Rs 4,200 crore.”

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The UK-based bank had been identified by an investment committee headed by Indiabulls Housing director KC Chakrabarty, a former deputy governor of the Reserve Bank of India (RBI).

The committee had been formed by the company to draw up a road map for developing a deposit-taking franchise.

The housing finance company has received Indian and UK regulatory approvals.

This includes consent from the RBI, India’s National Housing Bank and the Prudential Regulation Authority (PRA) of the Bank of England and Financial Conduct Authority (FCA) of the UK, Indiabulls said.
The proposed investment will give the company a global platform for developing a deposit-taking franchise in a highly regulated market, while OakNorth Bank will gain from the expertise of the company in lending to small businesses, said company officials.

Indiabulls Housing Finance is the largest nonbank lender to the small and medium-sized enterprise (SME) segment with loan disbursals of over $5 billion and outstanding loan assets of over $2.3 billion.

The company reported Rs 1,978-crore net profit for the year ended March.This investment will have no impact on the company’s dividend policy guidance of paying out 50% of profit, it said.

The acquisition is a strategic investment. And going forward, the company maintains its guidance of 20-25% annual growth across all financial parameters, company executives said.

London is not a new market for the group. Last year, it acquired 22-23 Hanover Square in central London, a commercial property, in a closely contested auction from Scottish Widows Investment Partnership, now part of Aberdeen Asset Management.

The Indian developer had bid 155 million pounds (more than Rs 1,500 crore) for the asset.The developer has received planning permission from Westminster City Council for redevelopment of the property.

ET had earlier reported that the company is in talks with private equity firms, sovereign funds and family offices to sell a 40% stake in the project in the Mayfair locality of Central London for around Rs 1,000 crore.

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