In one of the largest equity investments in the affordable housing finance segment in India, sovereign wealth fund Abu Dhabi Investment Authority (ADIA) is set to buy a 20 per cent stake at IIFL Home Finance Limited. The company will buy the stake for Rs 2,200 crore, after which the valuation of the mortgage lender is set to increase to Rs 11,000 crore, IIFL Finance said in a filing with the BSE. This is going to be the largest equity investments in the affordable housing finance segment in India by an investor. The shares of IIFL Finance zoomed by 8 per cent in early trade on Friday on the news.
“Leading Non-Banking Financial Company IIFL Finance Limited today said that its wholly owned subsidiary IIFL Home Finance Limited, one of India’s largest affordable housing finance companies with assets under management of Rs 23,617 Cr as of March 31, 2022, has entered into definitive agreements for raising Rs 2,200 Cr of primary capital for a 20 per cent stake from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA),” read the IIFL Finance press statement dated June 9, Monday.
IIFL Home Finance Limited said it has proposed to use the additional capital from the deal to continue its granular expansion strategy into new markets to address the significant and growing demand for housing loans. “This would be one of the largest equity investments in the affordable housing finance segment in India by a financial investor. Backed by a technology backbone enabling 100 per cent digital onboarding for home loans, robust credit appraisal and collection systems, IIFL Home Finance Limited proposes to use the additional capital to continue its granular expansion strategy into new markets to address the significant and growing demand for housing loans,” it said.
Avendus Capital and IIFL Securities were the financial advisors to IIFL Home Finance for this transaction. The deal would mean looking at a greater value in IIFL Finance, which has a market cap of Rs 12,500 crore and a loan book of Rs 52,000 crore. On the other hand, with a market value of Rs 11,000 crore, IIFL Home Finance has a loan book worth Rs 24,000 crore.
Nirmal Jain, Founder, IIFL Group said, “We are delighted to partner with ADIA who bring to the table long term commitment and rich experience of supporting growing businesses. The investment recognizes IIFL Home Finance’s position as one of India’s largest providers of affordable housing loans and how well it is placed to continue to target the large, resilient housing finance market.”
Monu Ratra, CEO, IIFL Home Finance said, “IIFL Home Finance has built a strong foundation and is at an inflection point as it leverages new strategies such as co lending, foraying into more granular products and expanding reach across Tier II and Tier III regions. We welcome our new partners and look forward to working with them in the next phase.”
Established in 2006 as a wholly owned subsidiary of IIFL Finance, IIFL Home Finance has created assets under management of Rs 23,617 Cr as of March 31, 2022, with an active customer base of 168,000 across 16 states and two union territories with over 200 branches backed by over 3,200 employees. The company offers small-ticket housing loans, loans against property and construction finance.
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