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IFC plans $350 mn debt investment in HDFC, Bajaj Finance

10 May, 2017

International Finance Corporation (IFC) plans to invest a total of $350 million in mortgage lender Housing Development Finance Corp and non-banking finance company Bajaj Finance Ltd.

IFC is looking to invest up to $200 million (Rs 1,400 crore) in HDFC through five-year non-convertible debentures (NCDs) or masala bonds, the World Bank’s private-sector arm said in a disclosure. Masala bonds refer to rupee-denominated bonds issued outside India.

HDFC proposes to use the proceeds for providing debt finance to developers of affordable housing projects in India. HDFC has committed $600 million from its own resources for funding such projects.

In a separate disclosure, IFC said it is looking to invest up to $150 million in Bajaj Finance via NCDs. The non-banking finance company will use the proceeds for lending to micro, small and medium enterprises.

Bajaj Finance, part of the diversified Bajaj Group, had a book size of Rs 54,284.8 crore as of December 2016. Bajaj Finserv Ltd, the group’s financial services arm, owns 57.8% of Bajaj Finance.

The IFC board will make a final decision on these proposals in the second week of June.

IFC has been investing in several Indian mortgage lenders and NBFCs. The investment firm seeks to deepen its bet on segments that offer loans for low-cost houses and that cater to SMEs.

Affordable housing has received a lot of attention thanks to the Narendra Modi government’s plan to provide housing for all Indians by 2022. In the budget for 2017-18, finance minister Arun Jaitley said he planned to accord the infrastructure status to affordable housing.

Earlier this month, IFC proposed to invest up to $40 million in Aavas Financiers Ltd, the housing finance unit of private equity firm Warburg Pincus-backed Au Financiers (India) Ltd.

In April, IFC said it planned to invest in Fullerton India Credit Company Ltd and Capital First Ltd via NCDs. Fullerton planned to use the capital for lending to micro, small and medium enterprises.

Last year, IFC said it planned to invest up to $38 million in Aspire Home Finance Corporation, Micro Housing Finance Corporation and Aptus Value Housing Finance India Ltd.

In the past, IFC has also backed mortgage lenders Dewan Housing Finance and PNB Housing Finance.

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IFC plans $350 mn debt investment in HDFC, Bajaj Finance

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