HDFC buys Credila stake for education loans foray

Housing finance major HDFC is entering the education loan business, which the company sees as a high growth segment. To this end, it has acquired a 41-per cent equity stake in a finance service company Credila Financial Services from DSP Merrill Lynch Capital. Credila specialises in education loans.

Though the acquisition is modest in value terms, the move assumes significance as the housing finance company is entering into a new line of business. The investment is less than Rs10 crore, said V S Rangan, senior general manager, HDFC, in Mumbai on Friday.

Mumbai-based Credila Financial specialises in student loans, especially for students going abroad. The NBFC (non-banking financial company) has a loan portfolio of around Rs20 crore, built over the last two years.

Rangan said the student loan segment is growing at an annualised rate of about 25-30 per cent, which makes this investment an attractive one for HDFC. The company had earlier given some small student loans, but did not focus on this segment.

As of now HDFC has no plans to lend directly. Instead it will focus on growing the business of Credila Financial and even infuse fresh capital if required. ''We have to grow this business. So we will infuse capital as required. As of now not much capital is required,'' Rangan said.

DSP Merrill Lynch has sold its entire stake of 41 per cent. The remaining 59 per cent is held by the promoters Bohora Brothers. Anil Bohora and Ajay Bohora launched Cadila in 2006 along with Merrill Lynch. Credila commenced business as an NBFC from 2007 with its registered office in Mumbai. It currently has offices in Pune, Bangalore, Hyderabad, Chennai, Delhi and Nashik.