Nexus Venture Partners Divests Significant Stake in ISFC

Nexus Venture Partners, a US-based venture capital firm, has announced a notable shift in its investment strategy by divesting a significant portion of its stake in India Shelter Finance Corporation (ISFC). The firm offloaded 5.97% of its holding in the Gurugram-based housing finance company for INR 482 crore through open market transactions on Monday.

• The divestment was carried out through Nexus Ventures III and Nexus Opportunity Fund II Ltd., affiliates of Nexus Venture Partners.
• A total of 64 lakh shares were sold in two bulk deals on the Bombay Stock Exchange (BSE) at prices ranging from INR 752.35 to INR 753.27 per share.
• The total transaction value amounted to INR 481.95 crore.

Impact of the Divestment on Nexus Venture Partners' Stake

This divestment has reduced Nexus Venture Partners' total stake in ISFC from 21.32% to 15.35%. Nexus had been a significant backer of ISFC since 2012, accumulating a stake of 28.2% through multiple funding rounds. This move signifies a partial exit strategy while retaining a notable share in the company's future.

• The divestment comes after a decade of sustained investment by Nexus Venture Partners.
• Despite reducing its stake, Nexus Venture Partners remains a significant investor in ISFC.

Goldman Sachs and SBI Life Insurance Increase Stakes in ISFC

Following Nexus Venture Partners' divestment, financial institutions like Goldman Sachs and SBI Life Insurance capitalized on the opportunity to increase their stakes in ISFC. Goldman Sachs acquired 7.42 lakh shares, representing a 0.69% stake, while SBI Life Insurance picked up 6.70 lakh shares, or 0.62%, at an average price of INR 752.35 per share.

• Combined, the two institutions increased their holdings by 1.31% for a total of INR 106.26 crore.
• Goldman Sachs' stake in ISFC now stands at 1.78% after the transaction.
• SBI Life Insurance's holding has grown from 1.94% to 2.56% following the acquisition.

ICICI Prudential Life Insurance Also Invests in ISFC

In addition to Goldman Sachs and SBI Life Insurance, ICICI Prudential Life Insurance also purchased 7.70 lakh shares, representing a 0.72% stake, for INR 57.93 crore. This further reflects institutional confidence in ISFC's market potential.

ISFC's Share Price Declines Despite Transactions

Despite the transactions, ISFC's shares saw a sharp decline of 7.81%, closing at INR 730 per share on the BSE.

ISFC's Business Focus

ISFC primarily caters to first-time home loan buyers in India's low- and middle-income groups, focusing on Tier II and Tier III cities.

Summary of the Investment Shift

The recent investment shift in ISFC highlights a strategic move by Nexus Venture Partners to partially exit its stake while retaining a significant share in the company's future. This divestment has opened opportunities for other financial institutions like Goldman Sachs, SBI Life Insurance, and ICICI Prudential Life Insurance to increase their holdings in ISFC, reflecting institutional confidence in the housing finance company's market potential. Although ISFC's share price declined following the transactions, the overall investment activity indicates a positive outlook for the company's future.