INDIAN mortgage lender has sold part of its stake in London-based OakNorth Bank at 25 per cent discount.
Indiabulls Housing Finance, the country’s third-largest mortgage lender, sold nearly 8 per cent of its stake in OakNorth for £111.8 million to Boston-based HighSage Ventures over the past couple of months, valuing the business at around $2 billion.
The Indian lender, which is in troubled waters, bought 40 per cent stake for £69.5m in the bank back in November 2015.
Reports said that the valuation is considerably lower than the $2.8bn price tag put on OakNorth during its last funding round, when it raised $440m with Japanese investment giant Softbank leading the round.
OakNorth provides loans of between £500,000 and £25m to small and medium businesses. It has debt finance teams in London, Manchester, Bristol, Birmingham, Leeds and East Anglia.
The company, which was established four years ago, has lent over £4.5bn, directly helping with the creation of 15,000 new homes and over 19,000 new jobs in the UK.
Indiabulls needed to raise capital to improve its adequacy ratio, meaning the lender needed to get more cash on board to balance against its high exposure to loans.
The company has struggled through the year of the pandemic with its share price down more than 50 per cent. It was also exposed to Mumbai-based private sector lender Yes Bank, which was involved in alleged money-laundering controversy back in March.
“This was a private transaction between Indiabulls and the buyer as part of a wider secondary sale Indiabulls is doing, so the price has been set by them based on their capital needs, rather than a re-valuation of the OakNorth business," said spokeswoman for OakNorth.
"It is not a primary investment as OakNorth is extremely well-capitalised for its business plan."
Bobby Bawa