IIFL Home Finance looks to raise Rs 5,000 cr via direct assignment

Firm to scale up funding to developers, especially those complying with green finance norms

IIFL Home Finance plans to raise between Rs 4,000-5,000 crore through direct assignment (a form of securitisation) of housing loans and scale up funding to developers, especially those complying with green finance norms.

HFC, which raised Rs 2,200 crore in equity funding from Abu Dhabi Investment Authority (ADIA) early this month, will consider listing the shares on exchanges in the medium term to provide an exit.
 

Monu Ratra, chief executive and managing director, IIFL Home Finance, said once the fresh equity is infused, the firm's capital adequacy is expected to be about 40 per cent. This, plus retained earnings each year should suffice to support growth for five years.

The mortgage finance player’s assets under management (AUM) stood at Rs 23,617 crore as of March 31, 2022. The HFC is looking to expand assets annually by 14-15 per cent for five years.

Its target is the affordable housing market. The firm follows an asset-light business model which involves selling part of loans originated to other lenders (direct assignment). Offloading loans via this route also generates resources for the company. Almost 33-34 per cent of liabilities (resources) were raised through direct assignment in FY22.

Referring to the plan to fund developers, he said the finance company has been careful about construction finance and it forms about 2-2.5 per cent of book. HFC will scale up project and construction finance but at no point of time it will breach five per cent level (of advances). It will remain range bound.

This funding will be basically to those doing affordable housing finance projects where the lender has comfort and the turnaround is faster (two three years).  The monitoring and control in such small projects is easier and has higher predictability of sales, Ratra said.

Asian Development Bank has given IIFL HFC $10 million at concessional rate to provide loans to affordable housing developers who are going to build green dwellings. These funds are part of $68 million loan from Asian Development Bank (ADB) to improve funding to affordable green housing for lower-income groups in India.