Aftermath of demonetisation: ICICI Home Finance sale plan shelved

Demonetisation seems to have taken a toll on M&A activities, as sales plans of ICICI Bank's home finance arm seemed to have been shelved given valuation discomfort between the concerned parties.

The proposed sale is now on hold until there is a suitor, who is willing to pay the appropriate price for  the transaction, chances of which are now dim, as demonetisation has taken its toll on the Real Estate sector, which in turn has negatively affected the housing finance companies as demand for property has cooled down in the country.

Equity Fund TPG had entered into the fray to buy the home finance division of the bank after the talks between another PE fund of ICICI Bank became inconclusive. The bank was earlier looking at a price of almost Rs 2,400 crore, i.e about two times the book value of the business, but subsequently lowered it to Rs 2,200 crore as talks with TPG continued.

The deal seems to have been on hold primarily due to the toll the demonetisation drive will be having on the realty sector and consequently on housing finance firms who till now were running in profit..

Normalcy seems to be far from away at this point of time. This has been quite evident from the fact that a whole lot of listed housing finance companies have seen a drop in their valuation, post the currency demonetisation move.