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IndoStar Capital drops deal to buy majority stake in ICICI Home Finance

IndoStar Capital Finance Ltd. called off a deal to acquire a majority stake in ICICI Home Finance Co. Ltd., a unit of ICICI Bank Ltd., due to synergy issues, Mint reported Nov. 29, citing R. Sridhar, CEO of IndoStar Capital.

The Indian nonbanking finance company decided not to pursue the acquisition because of "a problem of alignment of objectives," Sridhar said.

IndoStar Capital had initiated talks to buy a 67% stake in ICICI Home Finance for 20 billion rupees after Sridhar was appointed as CEO and executive vice chairman of the former in April, the publication reported in July. The term sheet for the deal had been signed, with completion expected before the end of December, according to sources.

While in a previous role as senior adviser at TPG Capital Advisors LLC, Sridhar had tried to buy ICICI Home Finance, but the deal failed as other private equity firms such as True North (Managers) and Baring PE Asia offered a higher price. The home finance unit's discussions with the two firms were also called off after reportedly failing to reach an agreement on key operational issues.

Meanwhile, ICICI Bank had attempted to sell its unit twice previously, but talks were axed reportedly due to last minute disagreements.

With the termination of the deal, Sridhar said IndoStar Capital would expand its home loan book through unit IndoStar Home Finance, focus on growth of its retail lending business and open more branches over the next three years.

As of Nov. 28, US$1 was equivalent to 64.47 Indian rupees.