Affordable housing loan provider Aavas Financiers Ltd has signed an agreement with the Philippines-headquartered Asian Development Bank (ADB) for availing a loan of up to $60 million (about Rs 450 crore at current exchange rate).
The agreement with Aavas marks ADB’s second reported funding commitment this week.
Earlier today, the multilateral lender announced a $100 million (around Rs 753 crore) funding for the National Investment and Infrastructure Fund’s fund of funds.
In a statement, publicly listed Aavas said that the funding will be used to provide housing finance to women in low-income communities either as primary borrowers or co-borrowers.
“ADB’s long-tenure funding in the current market environment will not only help us to cater to the large underserved affordable housing segment but also improve investor confidence in the affordable housing finance sector as a whole,” said Aavas co-founder and chief financial officer Ghanshyam Rawat.
Susan Olsen, senior investment specialist, private sector operations department, ADB, said the funding would help to enable higher property ownership rates for women in lower-income groups and lagging states.
Founded by chief executive Sushil Agarwal, Aavas was incorporated in 2011 as a wholly owned subsidiary of AU Small Finance Bank Ltd.
In 2016, AU Small Finance sold its stake in the housing finance provider to private equity investors Kedaara Capital and Swiss investment firm Partners Group to comply with the small finance bank guidelines.
Aavas says it currently has more than Rs 7,000 crore in assets under management and 245 branches across 10 states in the country. In February, Kedaara sold a part of its stake in the company.
In May last year, World Bank’s International Finance Corporation (IFC) offered to provide $50 million (around Rs 351 crore) in debt funding to the lender.
That was not the first time IFC had invested in Aavas. In 2017, the institution invested $20 million (around Rs 130 crore then) in the company.
Aavas made a weak stock market debut in October 2018. Its initial public offering had failed to achieve full subscription, in part due to weakening confidence in non-banking financial companies following Infrastructure Leasing & Financial Services defaulting on its debt payments. However, shares have since recovered, with the stock ending 2.55% up on Monday at about Rs 1,091 apiece.