Sale of ICICI Home Finance on hold as cash chaos impacts realty

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The aftermath of demonetisation has hit the realty sector and ICICI Bank, too, is bearing the brunt. The bank’s plan to sell its home financing unit has again taken a back seat this year. Private equity fund TPG has decided to not pursue this acquisition over valuation differences.

According to a report in Mint , changed market conditions following the government’s cash clean-up drive also influenced the decision to put buying on hold.

According to industry experts, it is unlikely that there will be an improvement in demand and supply of real estate in the next few quarters. TPG is of the opinion that the slowdown in the market will impact home finance companies including ICICI Home Finance.

Earlier, the bank was in talks with private equity funds India Value Fund Advisors (IVFA) and Baring Private Equity Asia. However, disagreements led to a hold on the decision to sell the subsidiary. Later in June, the sale process resumed with TPG and the bank was looking at a value of Rs 2,200 crore. In competition, IVFA and Baring PE Asia offered a higher price of Rs 2,400 crore in August. But, again the talks broke down with IVFA and Baring.

As of now, the realty sector is in distress and ICICI Bank has missed the opportunity to sell its home finance division.