World Bank's International Finance Corporation (IFC) will make a debt investment of up to $250 million (approximately Rs 186 crore) in Housing Development Finance Corporation (HDFC).
“The proposed investment comprises a senior debt investment of up to $250 million in HDFC Ltd (HDFC or the Company). The loan proceeds will be used to provide retail buyers financing for affordable housing with a mutually agreed portion of IFC funding to be earmarked for green affordable housing,” IFC announced on its website.
Specifically, IFC said it will advise HDFC on many aspects of the affordable green housing segment including its potential and impact, the certifications and potential pipeline of projects, as it continues to build a commercially viable green affordable housing asset class.
In line with the Indian government’s "Housing for All by 2022" initiative, the most significant, expected project-level outcome is increased access to financing for affordable housing for lower and middle-income segments, IFC stated.
The project will also support HDFC in gradually growing its nascent green housing portfolio. Beyond the project, IFC anticipates that the investment, together with other IFC's efforts in the segment, will help promote greater competitiveness in affordable housing financing via demonstration and replication channels.
Under the partnership, IFC will share global best practices in affordable and green building financing by conducting workshops/case study walk throughs from other countries and support HDFC’s capacity building exercises for the Company to successfully identify and expand into this affordable green housing segment.
HDFC, established in 1997, is among the top housing finance companies (HFCs) in India and counts Government of Singapore (GIC), India’s largest insurer Life Insurance Corporation of India (LIC) and Invesco Oppenheimer Developing Markets Fund among its shareholders.
Last year, People’s Bank of China had cut its stake in HDFC just months after raising its shareholding in the HFC.
The World Bank unit has an active LP (limited partner) portfolio in India and makes direct private equity-style investments as well as lends to companies.
IFC’s most-recent investment, along with its two associate entities, includes, Rs 916 crore ($124 million) in Kerala-based Federal Bank through a preferential allotment to acquire 1.75% stake each in the bank.
Last month it also proposed to additionally invest Rs 156.05 crore ($21.3 million) in dairy company Dodla Dairy Ltd ahead of its proposed initial public offering (IPO).
In May, the World Bank unit proposed a loan of up to $50 million (Rs 354 crore) for Rabobank to help the Dutch cooperative bank fund agriculture and renewable energy projects in India.
It also committed an equity investment of up to $15 million in a India-focused clean energy fund managed by GEF Capital Partners.
Prior to that, it invested up to $40 million in the third fund of Baring Private Equity Asia’s India-focused credit platform.