International Finance Corporation (IFC), private investment arm of the World Bank, has proposed to make a debt investment of up to $75 million (around Rs 574 crore) in Aadhar Housing Finance Ltd, a portfolio company of US-based private equity major Blackstone Group.
IFC's investment in Aadhar comes a couple of days after it announced commitment of at least $35 million (around Rs 268 crore) in homegrown Motilal Oswal Private Equity's (MOPE) fourth fund, which increased its size to over $588 million (Rs 4,500 crore), from earlier $500 million (Rs 4,000 crore).
“The proposed IFC investment comprises up to 7-year senior debt investment of up to $75 million in Aadhar Housing Finance Limited (Aadhar). The proceeds will be utilised to extend financing to retail buyers of affordable/green affordable housing units,” a disclosure by IFC mentioned.
The commitments come amid a delay in approval for launching an IPO (initial public offering) filed by the Indian mortgage lender in January last year. Aadhar had proposed a Rs 7,300 crore IPO comprising of a fresh issue of Rs 1,500 crore and an offer for sale (OFS) of Rs 5,800 crore.
In Aadhar, IFC’s Market Accelerator for Green Construction (MAGC) Programme could support the investment through Performance-based incentive (PBI), which is a blended concessional finance towards green projects.
“A mutually agreed percentage of IFC’s loan proceeds will also be earmarked for green affordable housing. The project is expected to provide counter-cyclical support for housing needs of lower income groups, who have been severely impacted by the disruptions caused by COVID-19, as well as support green housing, which is still underdeveloped in India, particularly in the affordable segment.”
Set up in 2010, Aadhar is the largest housing finance company (HFC) focused on the low-income housing segment in India in terms of assets under management (AUM) of approximately $1.9 billion (around Rs 14,550 crore) as of March 31, 2021.
The Mumbai-headquartered HFC has 325 branches spread across 20 states of India.
In 2019, Blackstone bought a majority stake in Aadhar from Dewan Housing Finance Ltd (DHFL) and the Wadhawan group for around Rs 2,200 crore. In the same transaction, Blackstone had also bought the 17% stake of IFC in Aadhar. Around March 2020, Blackstone had made an additional investment of Rs 500 crore ($66 million).
Aadhar is likely to be Blackstone’s largest bet in India after Bengaluru-based software services firm, Mphasis.
At present, Blackstone holds around 98.7% stake in the housing finance firm. India’s second largest private sector lender ICICI Bank holds around 1.18% stake while some smaller shareholders owned the remaining stake.
