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Anand Mahindra, chairman, Mahindra Group Photo Credit: Reuters

IFC to invest $125 mn in two Mahindra Group companies

15 May, 2017

International Finance Corporation plans to invest $125 million (Rs 800 crore) in two financial services companies of the diversified Mahindra Group, the World Bank’s private-sector investment arm said on Monday.

IFC will put in $100 million in Mahindra & Mahindra Financial Services Ltd and $25 million in Mahindra Rural Housing Finance Ltd via non-convertible debentures, it said in separate disclosures.

Mahindra Finance will use the proceeds of the IFC investment for lending to the agricultural sector.

Mahindra Rural will use the proceeds to provide finance for affordable housing in rural and semi-urban areas.

Mumbai-based Mahindra Finance has 1,182 branches across India. It provides loans for cars, tractors, tractors and utility vehicles, mainly in rural and semi-urban areas. The non-banking finance unit of auto and tractor maker Mahindra & Mahindra Ltd has financed over 4.7 million customers and managed assets worth $6 billion as of 31 March 2017. It has a standalone loan book of Rs 42,523 crore.

Mahindra Rural is a unit of Mahindra Finance, which holds a 87.5% stake with National Housing Bank owning the remaining stake. The company provides loans for home construction, extension, purchase and improvement to customers in rural and semi-urban India. It has more than 350 branches in 10 states.

Separately, in a stock-exchange filing Mahindra Finance said it planned to increase its borrowing limit to Rs 60,000 crore from Rs 55,000 crore. The company’s outstanding borrowings stood at Rs 34,670 crore as of 31 March 2017, and it plans to raise up to Rs 29,000 crore through NCDs.

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

Last week, IFC disclosed its plans to invest $200 million in mortgage lender HDFC and $150 million in Bajaj Finance via NCDs.

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. 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 to invest $125 mn in two Mahindra Group companies

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