Poonawalla Fincorp to sell housing finance business to TPG for Rs 3,900 crore; shares decline

Post an exhaustive strategic review of the proposals, the board decided that a complete stake sale would be in the best interest of both the entities and all stakeholders, considering the different customer segments, geographies, and distribution models.

With the rapidly-growing digital ecosystem, Poonawalla Fincorp (standalone) sees growth opportunities in its current and proposed line of businesses. The digitisation further complements innovation in products, customer experience and engagement, it added.

Adar Poonawalla, Chairman of Poonawalla Fincorp, said, "Financial services business is of strategic importance to us, and we stay fully committed towards creating value for all our stakeholders and building Poonawalla Fincorp into a new age financial services player of choice."

Poonawalla Fincorp will continue to focus on its growth coming from tech-led businesses and a "branch-lite model" while Poonawalla Housing will follow its own differentiated path as a completely independent business, Poonawalla added.

On CNBC-TV18's dealing room chatter on December 9 had highlighted that the street is anticipating a corporate development to take place in the stock soon. 

Brokerage firm JM Financial believes that the move is another confirmation of the management's focus on its core business. The transaction is expected to drive significant accretion to the company's networth, according to JM Financial.

The brokerage cites a strong risk-reward for long-term investors given the medium-term growth opportunity in the stock, low cost of funds, high quality customer segment and a digital-native business. It expects Poonawalla Fincorp's valuation multiples to rerate higher in the medium-term. It maintained its buy rating on the stock, calling it one of its top picks within the NBFC space, with a price target of Rs 445.

Shares of Poonawalla Fincorp are trading 1.1 percent lower at Rs 298.85.