InvestorQ : Can you tell me about the stake sale by IIFL Home Finance to ADIA?
Niti Shenoi made post

Can you tell me about the stake sale by IIFL Home Finance to ADIA?

ishika Banerjee answered.
8 months ago

IIFL Home Finance, the wholly owned subsidiary of IIFL Finance, has got an investment of Rs.2,200 crore from Abu Dhabi Investment Authority (ADIA) in exchange for a 20% stake in the company. IIFL Finance is the NBFC arm of the IIFL group, which his into lending activities. Abu Dhabi Investment Authority (ADIA) is the sovereign fund of the Government of Abu Dhabi, which is part of the United Arab Emirates. IIFL Home Finance plans to use the additional capital to expand into new home loan markets in India.

IIFL Finance is one of the leading NBFCs in India and the capital infusion will not only give them a good basis for SOTP valuation but also value stock as currency. This marks one of the biggest investments by a global fund into the Indian home finance space. IIFL Home Finance, which was established in the year 2006 with focus on providing loans for affordable housing, has total assets under management (AUM) of Rs23,617 crore. The company is one of the market leaders in India in the affordable housing finance market.

To quote the founder of the IIFL group, Nirmal Jain, ADIA bring to the table long-term commitment and rich experience of supporting growing businesses. He felt that the investment was also an acknowledgement of the position and standing of IIFL Home Finance as one of the leading providers of affordable housing loans. Affordable housing is one of the biggest potential growth markets in India and is expected to have a high degree of correlation with the GDP growth as India moves towards becoming a $5 trillion economy.

What exactly would have attracted ADIA to pick up a substantial stake in IIFL Home Finance? To quote the ED of the ADIA private equity department, Hamad Shahwan Aldhaheri, “IIFL Home Finance had established itself as one of India’s leading technology-enabled mortgage lenders”. The investment made by ADIA is intended to support the company in its next phase of growth as it looks to reach out to and cater to a much larger audience. The deal was managed by Avendus Capital and IIFL Securities.

IIFL Home Finance specializes in offering small-ticket housing loans, loans against property, and construction finance. It basically caters to the borrowers who do not have access to the traditional sources of bank funding in India. If the affordable housing market actually grows as envisaged by the government, then this equity infusion by ADIA could act as an inflexion point for IIFL Home Finance. It catapults them into a position wherein they can offer more customized and granular products, especially in the Tier II and the Tier III cities of India