The country's largest education loan provider, HDFC Credila Financial Services, is up for sale. Before merging with HDFC Bank, HDFC has decided to sell its student loan subsidiary and hired an investment banker to handle the stake sale. According to sources, the company will be valued at Rs 10,000 crore, or roughly four times its net worth.
HDFC is in the process of merging with HDFC Bank, and the Reserve Bank of India (RBI) has instructed HDFC to sell or merge Credila with either HDFC or HDFC Bank prior to the consolidation. Both merging entities are focused on integrating their home finance businesses and are unwilling to take on any additional consolidation.
Credila is India's largest education-focused NBFC, specialising in providing education loans to students studying in India and abroad. It has provided loans to 1.2 lakh customers since its inception in 2006.
HDFC Credila's gross loan assets were Rs 15,298 crore in FY23, a 73% increase from FY22 levels, with a profit after tax of Rs 276 crore and a net interest margin of 4%. It had a net worth of Rs 2,435 crore at the end of FY23.
When HDFC bought Credila from brothers Anil and Ajay Bohora, its education loan assets were worth around Rs 10,000 crore. The Bohora brothers founded the company after having difficulty obtaining a bank loan for their own education. In 2007, DSP Merrill Lynch invested 40% of its equity in Credila, and HDFC bought out DSP Merrill Lynch's stake in Credila in 2009.
The Bohora brothers sold their 9.1% stake in HDFC Credila to HDFC in December 2019 for Rs 395 crore ($56 million), valuing the company at $614 million (Rs 4,331 crore).