Indiabulls Housing Fin makes 3-fold gains on banking investment

Mumbai: Indiabulls Housing Finance, which acquired 40 per cent of OakNorth Bank for Rs 663 crore in November 2015, has sold a third of its stake in the UK bank to the Government of Singapore-owned GIC for Rs 770 crore, making more than threefold gains in just two years.

At current valuations, Indiabulls’ remaining stake in the bespoke lender will be worth about Rs 1,510 crore. Even after this sale, Indiabulls will continue to be the single largest shareholder in the UK bank, with two of its nominees on the board.

The Indiabulls Housing stock had fallen more than 17 per cent when the deal was announced over concerns that the diversification was into an unrelated business.

“Indiabulls wanted to partly monetise its stake to recover its original investment with a profit, and yet stay invested as a significant shareholder to participate in the future upside at the time of the bank’s IPO,” said a person privy to the development.

Founded in 2015 to address the midmarket funding gap in the UK, a highly competitive and regulated market, OakNorth Bank became profitable after just 11 months, and within two years of operations has expanded its loan book to more than 800 million pounds.

Prior to this, the bank had secured an investment of $203 million from three leading international investors, the Clermont Group, Toscafund and Coltrane, for a 16 per cent stake that valued the bank upward of $1.2 billion.

Indiabulls Housing shares have surged 80 per cent so far this year from Rs 679 to Rs 1,197.