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Unity Small Finance Bank has emerged as the winning bidder for Aviom India Housing Finance after a competitive three-way auction conducted under the Insolvency and Bankruptcy Code. The bank offered an upfront payment of INR 977.5 crore, surpassing bids from Areion and Authum, securing significant recovery for creditors. Aviom had earlier faced insolvency due to loan defaults and regulatory concerns. The auction attracted six initial participants, though only three advanced to the final rounds. The resolution underscores investor interest in affordable housing finance and sets a precedent for structured recoveries in the sector.
Unity Small Finance Bank has successfully acquired Aviom India Housing Finance through a three-way auction held under the supervision of a National Company Law Tribunal-appointed administrator. The bank offered an upfront payment of INR 977.5 crore, surpassing other bidders, and emerged as the preferred bidder in the challenge process. Advertisement
Aviom India Housing Finance, which focuses on affordable housing loans, had initially attracted interest from six parties. Only three Unity Small Finance Bank, Areion (linked with Omkara Asset Reconstruction Company), and Authum Investment and Infrastructure participated in the final rounds. The administrator had set a floor price of INR 800 crore, with incremental bids required at INR 25 crore per round. Unity Small Finance Bank's final offer reflects a strong recovery for Aviom's creditors, with approximately INR 3 crore allocated for operational creditors and employees.
The bank's acquisition follows a period of financial distress for Aviom. It had entered insolvency due to defaults on loans, with earlier scrutiny from auditors and the National Housing Bank revealing accounting inconsistencies, including inflated mutual fund investments. The Reserve Bank of India had facilitated its admission into the corporate insolvency resolution process to ensure structured resolution.
Unity Small Finance Bank, which has backing from Centrum Financial Services and BharatPe's Resilient Innovations, has been gradually expanding its presence in the housing finance sector. Its winning bid implies around 71% recovery for lenders. The creditors committee had earlier recognized claims totaling INR 1,363 crore, with LIC Housing Finance holding the largest claim, followed by HDFC Bank, Kotak Mahindra Investments, and Tata Capital.
Prior to the auction, Unity Small Finance Bank had submitted an initial bid of INR 775 crore, leading the resolution race among several potential investors. Other firms, including Northern Arc, DMI Housing Finance, and Kifs Housing Finance, had submitted resolution plans but did not participate in the final auction. The competitive process highlights the continued interest of investors in the affordable housing finance segment despite prior financial challenges.
This acquisition strengthens Unity Small Finance Bank's loan portfolio in affordable housing and marks a significant milestone in the resolution of distressed housing finance companies. The deal is expected to stabilize Aviom's operations while delivering fair returns to creditors and employees.
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