ICICI Bank considers selling its home finance arm for Rs 4,400 crore

ICICI Bank might sell its housing finance arm, ICICI Home Finance to investors such as private equity funds for about $700 million or Rs 4,400 crore, according to people close to the development.

Citibank has been roped in to find buyers, the people cited above told the Economic Times. Three months ago, the India's largest private sector bank had invited the investment bank to pitch for the mandate and the decision to appoint Citibank was taken about a fortnight back.

A person close to the development said that the mandate was allotted recently and some private equity players and a couple of other investors have been approached by the investment bank.

It will be too early to say but some private equity players may enter the housing finance sector, he added.

"ICICI Bank keeps receiving enquiries from time-to-time from interested parties regarding its stake in ICICI HFC but has not taken any decision to sell its stake in this company," a spokesman for ICICI Bank said.

"ICICI Bank's mortgage business is primarily done within the bank and this business has been growing rapidly. Only a very small portion of the bank's overall mortgage business is done by ICICI Home Finance Company," he added.

When the financial daily approached Citibank, it declined to comment on the matter.

Its housing finance arm, which focuses on home loans in smaller cities, contributes about 10% of the book value of total home loans given by ICICI.

The deal needs the approval of the Reserve Bank of India as ICICI Home Finance is a Non-bank financial company (NBFC).

According to experts, it makes sense for the bank to exit the lower end of the home loan business. "Even the banking regulator has time and again told banks to focus on their core business. Exiting the smaller ticket size market would also help the bank maintain a healthy CASA (current and saving account) ratio," a senior banking analyst with a consultancy said.

(Image: Reuters)