IIFL Finance up 8% after ADIA picks 20% in housing fin arm for Rs 2,200 cr

This is the second investment by ADIA in entities working in housing finance space in FY23. Last month, it concluded a deal to pick up 10% in HDFC Capital Advisors for Rs 184 cr

Shares of IIFL Finance surged over 13 per cent to the day’s high of Rs 372, before ending 7.57 per cent higher at Rs 353.90 on Friday on the BSE.

The gains follow the news announcement on Thursday late evening by IIFL that its wholly-owned subsidiary, IIFL Home Finance (IIFL-HF) has entered definitive agreements for raising Rs 2,200 crore of primary capital for a 20 per cent stake from a subsidiary of the Abu Dhabi Investment Authority (ADIA). The deal completion is subject to regulatory approvals, it said.

This is the second investment by ADIA in entities working in the housing finance space this financial year. Last month, it concluded a deal to pick up 10 per cent stake in HDFC Capital Advisors Ltd (HCAL) for Rs 184 crore.

IIFL-HFC is a wholly-owned subsidiary of BSE listed IIFL Finance with assets under management of Rs 23,617 crore as of March 31, 2022.

Backed by a technology backbone enabling 100 per cent digital onboarding for home loans, robust credit appraisal and collection systems, IIFL-HF proposes to use the additional capital to continue its expansion into new markets to meet growing demand for housing loans.

“IIFL Home Finance has already established itself as one of India’s leading technology-enabled mortgage lenders. This investment aims to support the company for its next phase of growth, as it meets the significant demand in India’s large, under-served and fast-growing affordable housing finance market,” said Hamad Shahwan Aldhaheri, Executive Director of the Private Equities Department at ADIA.

The IIFL Finance subsidiary offers small-ticket housing loans, loans against property and construction finance. It also actively supports the construction of green affordable buildings, and has an active customer base of 168,000 across 16 states and two union territories with over 200 branches backed by over 3,200 employees.

Affordable housing finance in India is a $150 billion-plus market currently and is projected to grow rapidly over the next decade. The sector has seen disproportionate growth owing to an increase in mortgage penetration, rebound in property sales, government & regulatory initiatives, and developer consolidation among other factors.

Multiple players have emerged to take advantage of the large whitespace where banks have limited presence.

IIFL Finance in a statement said Avendus Capital & IIFL Securities were the financial advisors to IIFL-HF for this transaction.