International Finance Corporation (IFC), the private sector investment arm of the World Bank, is ramping up its exposure to home finance and renewable energy projects. The firm said on Thursday that it may invest a total of $75 million in Sundaram BNP Paribas Home Finance (SHF) and sector-focused NBFC PTC India Financial Services Limited (PFS) through the debt route.
This comes close on the heels of a plan to hike its holding in NBFC-MFI firm Bandhan Financial Services Pvt Ltd besides buying a minority stake in its proposed Bandhan Bank for around $94 million in total.
Sundaram BNP Paribas Home Finance (SHF)
IFC proposes to subscribe to SHF’s senior secured non-convertible debentures worth Rs 240 crore ($40 million).
The home finance firm plans to expand to the low income states of Rajasthan, Madhya Pradesh, Odisha and West Bengal; further deepening its rural presence and increasing penetration in the affordable housing segment.
Chennai-headquartered SHF has a strong distribution network of 104 branches across 10 states in India with a particular focus on Tamil Nadu, Andhra Pradesh, Karnataka and Kerala. The company has expansion plans in tier II and tier III cities.
It was initially promoted by Sundaram Finance Ltd which held 65 per cent stake in the company while IFC owned 20 per cent stake and remaining 15 per cent was held by FMO. After the exit of IFC and FMO, it became a JV between Sundaram Finance and BNP Paribas Personal Finance, which hold 50.1 per cent and 49.9 per cent stake respectively.
Incorporated in 1954, Sundaram Finance is one of the country’s largest NBFCs, having 579 branches, over 2 lakh depositors and nearly 100,000 commercial vehicle and car finance customers.
BNP Paribas Personal Finance (BNPP) is the retail banking arm of the BNP Paribas Group. One of the leading banks in Europe, BNPP provides home loans and consumer credit in the form of personal loans, purchase-specific loans or revolving credit.
PTC India Financial Services (PFS)
PFS is also planning to raise $35 million (about Rs 216 crore) from IFC through the subscription of listed, redeemable, secured 10-year non-convertible debentures under the foreign institutional investor (FII) route.
This is in addition to the existing senior loan facility that has been provided by IFC to the company in 2011.
The NBFC would utilise the money to increase investments in renewable energy and back projects setting up to 20MW solar projects and up to 24MW wind projects across the country.
PFS is promoted by PTC India Ltd (formerly Power Trading Corporation), the largest power trading firm in India. As of September 30, 2014, PTC holds 60 per cent equity stake in PFS with the other key shareholders being Macquarie Bank Ltd (5.7 per cent), Life Insurance Corporation of India (2.7 per cent), Bajaj Allianz Life Insurance Company Ltd (1.97 per cent), individuals/non-resident Indians (22 per cent) and others (7.63 per cent).
It is a public listed non-deposit taking, non-banking finance company categorised as an infrastructure finance company by the Reserve Bank of India. PFS is focused on funding projects across the energy value chain in India. The company raised funding from Goldman Sachs and Macquarie in 2008.
Shares of PFS were trading at Rs 63.30 each, down 3.28 per cent on BSE in a strong Mumbai market on Thursday at 12.53 PM.
(Edited by Joby Puthuparampil Johnson)