International Finance Corporation has invested Rs 130 crore ($20 million) in Jaipur-based Aavas Financiers Ltd to extend housing loans to low-income consumers in rural and semi-urban areas, the World Bank arm said on Thursday.
This investment is in line with IFC’s strategy to increase access to affordable housing finance to promote inclusive growth, it said in a statement.
“This new investment… is one of a series of investments and advisory engagements that IFC has conducted recently in the affordable housing space, aiming to generate strong market momentum contributing to the full realization of the national goal of Housing for All by 2022,” said Jun Zhang, India country head at IFC.
Aavas, formerly known as Au Housing Finance Ltd, offers loans to grocery merchants, dairy supply chains, carpenters, garment traders, and other self-employed people or salaried workers in the unorganised sector.
Private equity firm Kedaara Capital and Swiss investment firm Partners Group are major investors in Aavas.
Affordable housing has received a lot of attention on the back of the Narendra Modi government’s plan to provide housing for all Indians by 2022.
In the affordable housing finance segment, IFC has invested close to $300 million in six housing finance companies and one mortgage guarantee company in India since 2010, according to the statement.
In June, IFC invested $42 million in Repco Home Finance Ltd via non-convertible debentures.
In April last year, IFC had said it would invest up to $38 million in three housing finance companies—Aspire Home Finance Corporation, Micro Housing Finance Corporation, and Aptus Value Housing Finance India Ltd through non-convertible debentures.
In 2014, IFC provided debt financing of up to $50 million to PNB Housing Finance. In 2010, IFC had invested $4.45 million as equity finance in setting up of Aadhar Housing Finance Ltd, a subsidiary of Dewan Housing Finance Ltd.
The World Bank arm has also backed a couple of developers that construct low-cost housing projects. In May 2015, IFC agreed to invest $25 million in the affordable housing projects of Tata Value Homes Ltd. In 2013, IFC made an equity investment of $11 million in Bengaluru-based VBHC Value Homes.