Shriram Housing Finance has raised $50 million in its maiden external commercial borrowing (ECB) as the lender is looking to diversify its funding source.
Funds from the ECB will be used for the financing of affordable housing.
The mortgage lender, which is part of the Shriram Group, has raised the fund from Canara Bank’s London branch at 200 basis points over Secured Overnight Financing Rate (SOFR), a company official said.
The fund was raised for three years. The overall cost with one-year hedging cost has come around 8.4%, the official said. This is in line with the company’s average borrowing cost of 8.5%. One basis point is 0.01 percentage point.
The fund was raised for three years. The overall cost with one-year hedging cost has come around 8.4%, the official said. This is in line with the company’s average borrowing cost of 8.5%.
One basis point is 0.01 percentage point.
“As one grows it is always important to have multiple avenues of fundraising open,” managing director Ravi Subramanian told.
“We will be looking at this mode of raising funds in the future as well. While there are no targets we have set internally, we expect to raise another $150 million this year,’ he said, adding that global investors are keen to tap into the potential that the affordable housing finance sector in India presents.
The lender has financed 1.36 lakh housing units so far and has a gross loan book of Rs 9,000 crore at the end of June. It is one of the fastest growing in the affordable housing space with its loan portfolio growing 44% CAGR over the last four years.
The company is in line with its target of achieving Rs 10,000 crore AUM by September and expand it further to Rs 13,000 crore by March next year. About three-fourths of its business comes from the western and southern states with average loan size being Rs 16.6 lakh.
The company also borrows from banks, debt capital market, and gets refinancing from National Housing Bank. Securitisation by issuing pass-through certificates is another mode of fundraising for it.
To support the growth momentum, the company is also looking to expand its equity by about $100 million by the end of this fiscal. The parent Shriram Finance, which holds 85% in the housing subsidiary, is exploring the possibility of dilitung 10-20% of its holding.
“We are still debating about how to infuse capital into the housing finance company. The debate is whether we should infuse capital or we should unlock the value by diluting 10-20% of our holding, or go for an initial public offer. Shriram Finance Managing Director YS Chakravarti had told after the fourth quarter quarterly earnings.