IIFL Home Finance has raised a $50 million loan from US International Development Finance Corp (DFC) to expand its affordable housing finance portfolio, focusing on sustainable housing.
According to Monu Ratra, chief executive of IIFL Home Finance, who spoke to ET, the fund was raised at a concessional rate of 5.72%, which includes the cost of hedging.
Its average cost of funds is 8.4%.
The deal represents the growing confidence that overseas investors have in India’s rapidly expanding affordable housing market.
For the second time this year, the mortgage lender is raising debt. It received $68 million from the Asian Development Bank in January.
“Overseas investors, especially the development financial institutions, see affordable housing as an area they can have the biggest impact in developing countries. So, for them investing here is completely in sync with their social development goals of building sustainable cities and communities as well as taking climate action,” Ratra said.
Another mortgage lender focusing on the affordable segment, Shriram Housing Finance, raised $50 million last week from the London branch of Canara Bank in its first external commercial borrowing.
Last year, a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) bought a 20% stake in IIFL Home Finance for about Rs 2,200 crore.
The mortgage lender, a division of IIFL Finance, primarily serves low-income and economically weaker groups. At the end of June, it had assets under management of Rs 29,595 crore. More than three-fourths of this comes from home loans. Its other lending verticals include loans against property to small enterprises and construction finance.
Parent IIFL Finance raised $175 million last month in a three-year external commercial borrowing from lenders, including HSBC and overseas branches of Bank of Baroda (Gift City) and Union Bank of India (Sydney branch), at a blended cost of 9.2%.
