In one of the largest equity investments in the affordable home finance segment in India, the Abu Dhabi Investment Authority (ADIA) state equity fund will buy a 20 percent stake in IIFL Home Finance Limited. The company will buy the stake for Rs 2,200 crore, after which the mortgage lender’s valuation will increase to Rs 11,000 crore, IIFL Finance said in a filing with the BSE. This will be the largest equity investment in the affordable home financing segment in India by any investor. Shares of IIFL Finance zoomed on the news Friday by 8 percent in early trading.
Leading non-bank financial company IIFL Finance Limited said today 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 the collection of Rs 2,200 Cr in primary capital for a 20 per cent stake of a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA),” read the IIFL Finance press statement dated June 9 on Monday.
IIFL Home Finance Limited said it has proposed to use the additional capital from the deal to continue its detailed expansion strategy into new markets to address the significant and growing demand for home loans. “This would be one of the largest equity investments in the affordable home financing segment in India by a financial investor. Backed by a technology backbone that enables 100 percent digital home loan onboarding, robust credit rating and collection systems, IIFL Home Finance Limited proposes to use the additional capital to continue its detailed expansion strategy into new markets to meet significant and growing demand. to meet housing loans,” it sounded.
Avendus Capital and IIFL Securities were the financial advisors to IIFL Home Finance for this transaction. The deal would mean looking at 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 of IIFL Group, said: “We are delighted to partner with ADIA, which brings to the table a long-term commitment and rich experience in 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 placed it is to continue targeting the large, resilient home financing market.”
Monu Ratra, CEO, IIFL Home Finance said: “IIFL Home Finance has built a strong foundation and is at a turning point as it leverages new strategies such as announcements, seeks more granular products and expands reach in Tier II – and Tier III regions. We welcome our new partners and look forward to working with them in the next phase.”
Founded 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 client base of 168,000 in 16 states and two union territories with over 200 branches supported by over 3,200 Staff members. The company offers small housing loans, real estate loans and construction financing.
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