International Finance Corporation (IFC) is looking to invest up to $5 million in the housing finance unit of Jaipur-based AU Financiers (India) Pvt Ltd. The World Bank arm is looking to invest between $4 million and $5 million in Au Housing Finance Pvt Ltd, which will be a public-private partnership (PPP), with National Housing Bank (NHB) and the Rajasthan government also being investors. A leading housing finance company is also expected to invest in the venture.
AU Financiers, a privately held non-banking finance company (NBFC), is closing a $50 million round from private equity major Warburg Pincus. IFC, too, has invested in AU Financiers, which counts Motilal Oswal’s private equity fund as it first institutional investor. IFC has also backed Aadhar Housing, a unit of Dewan Housing Finance Corporation Ltd that focuses on low-cost housing finance.
Au Housing Finance may require $27 million or Rs 135 crore in equity funding for the first 12-24 months of its operations.
Initially, the firm is likely to focus on unserved and under-served markets, mostly in Rajasthan and other states where AU operates. Au Housing Finance will use AU Financiers’ distribution network of 70 branches, 70 per cent of which are located in rural and semi-urban areas of Rajasthan.
Promoted by first-generation entrepreneur Sanjay Agarwal, AU Financiers is primarily involved in commercial vehicles loans, loans against property and SME loans. It had $395 million of assets under management as of September 2011. Currently, AU Financiers mainly operates in Rajasthan and is expanding into other states like Maharashtra, Gujarat, Punjab, Goa and Madhya Pradesh.
For FY11, revenues and profit after tax (PAT) of AU Financiers jumped over three times to Rs 159 crore and Rs 42 crore, respectively. During Q1 FY12, the company reported PAT of Rs 7 crore on a total income of Rs 49 crore as compared to PAT of Rs 3 crore on total income of Rs 19 crore in Q1 FY11, according to report by credit rating agency Care.
AU Financiers raised Rs 55 crore in equity funding from IFC and Motilal Oswal’s India Business Excellence Fund (IBEF) in 2010. It had also raised Rs 20 crore from Motilal Oswal in 2008.