PHFL provides housing finance solutions through a network of 153 branches. Credit: Arek Socha from Pixabay.

Indian non-banking finance company (NBFC) Poonawalla Fincorp has reached an agreement with TPG to sell its housing finance subsidiary in a deal valued at INR39bn ($472.4m).

With a network of 153 branches across 20 states of India, Poonawalla Housing Finance (PHFL) offers ‘affordable’ housing finance solutions.

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The financial services provider has INR56bn ($678.33m) in assets under management (AUM), 64% of which is consists of home loans and 36% loans against property. 

PHFL’s average loan size is around INR1m ($12,113) to self-employed and salaried customers.

TPG is buying the entity through its Asia-focused private equity platform TPG Capital Asia.

It also plans to inject additional capital of up to INR10bn ($12.11m) in the near future to support the expansion of the financial services provider.

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For Poonawalla Fincorp, the long-term goal of the divestiture is to maximise value for shareholders as the company develops a tech-led, digital-first financial services provider with a focus on consumer and MSME finance, the firm said in a statement. 

TPG Capital Asia co-managing partner Puneet Bhatia said: “As India’s leading affordable housing finance provider, PHFL is uniquely positioned to grow in the fast-expanding affordable housing sector, which we believe is one of the most resilient asset classes across interest rate cycles. 

Poonawalla Group chairman Adar Poonawalla said: “Since its inception, PHFL has played an important role in empowering lives of tens of thousands of Indians by being a trusted partner of every homeowner it serves. 

“We have full confidence that it will continue to make a strong contribution to the affordable housing sector with our new partnership with TPG.”