India: Repco Home Finance raising $40m NCD from IFC to expand business

Photo: Ramesh Pathania/Mint

Repco Home Finance Ltd., a provider of loans for affordable housing, plans to raise Rs 268.85 crore ($40 million) from International Finance Corporation, the private lending arm of the World Bank.

The investment will be through issuing non-convertible debentures, a form of long-term debt lending.

“The project is intended to support RHFL to increasing its reach and penetration in the affordable housing finance segments, especially in tier II and tier III cities,” IFC said in a filing.

RHFL is a publicly listed company, and promoted by Repco Bank, a state cooperative society that has a 37.14 per cent stake. The balance is held by foreign and domestic investors.

In 2014, private equity firm Carlyle sold its entire holding in RHCL for $78 million, making a near nine-fold return on its six-year-old investment.

RHFL operates 106 branches and 36 satellite centres — where partial banking services are available — in 12 Indian states.

The funding is in the form of long term debt of seven years. This will contribute to diversifying the funding profile of the company, which is currently comprised of loans from the National Housing Bank and other public-sector banks.

Affordable housing is a fast-growing real estate sector in India, given the massive shortage of it. According to the housing plan of the government of India, about 100 million homes need to be built in India, and about 95 per cent of that will be for buyers in low-income groups.

This is a huge opportunity for investors, and organizations like Essel Group and Japanese realty firm Daiwa have invested in affordable housing projects in India. Luxury projects, which had attracted investment previously for their higher margins, are now  struggling to sell apartments in cities like Mumbai and Gurgaon.

RHFL is focused on providing access to housing finance to low income borrowers, specifically those employed in the informal sector such as self-employed micro-entrepreneurs and unorganized sector salaried workers.

Buyers of low-cost housing find it difficult to get loans from housing finance corporations and banks because of perceived higher risk profile of such borrowers and difficulty in credit assessment.

Giving impetus to more construction projects will encourage more employment. The construction industry is one of the largest employers of labour in urban India and affordable housing is the most labour intensive construction, providing high potential for employment opportunity to the urban poor.

IFC has been involved in financing affordable housing in India before, including extending a Rs 450 crore credit line to Clearwater-backed Altico Capital.

Also read:

Shapoorji Pallonji launches affordable housing venture, to raise funds from PEs for land bank

Essel Group PE arm invests in affordable housing projects in Mumbai

Japanese realty firm Daiwa invests in Jerry Rao-led affordable housing firm VBHC

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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Following vacancies can be applied for (only in Singapore).   

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  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.