Mortgage lender Shubham Housing Development Finance Company, on Wednesday announced raising $112 million (around Rs 863 crore) in a round led by British International Investment, LeapFrog Investments and Asian Development Bank and existing investor Premji Invest.
As part of the transaction, UK’s development finance institution BII (formerly CDC Group), LeapFrog and ADB will infuse $78 million (around Rs 600 crore) primary capital in the business. LeapFrog and Azim Premji-owned PE Premji Invest will also acquire a complete stake from US-based Elevar Equity – marking an exit for the company – and a partial stake from Motilal Oswal.
According to a statement, the housing financier aims to use the fresh capital to bolster growth and enable a larger platform to provide affordable housing finance to emerging consumers across the country.
“ We will leverage the funds to help scale the organization to the next level,” Sanjay Chaturvedi, co-promoter and chief executive officer, Shubham said in the statement.
In March 2021, VCCircle reported that Shubham Housing Development Finance is looking to raise growth capital of up to Rs 500 crore (around $63.3 million) from global private equity players, others. Later, in June, another VCCircle report stated that British International Investment, then CDC Group, had emerged as frontrunner to invest in the PE-backed housing financier.
Founded in 2011 by Chaturvedi and Rupa Basu, Shubham Housing Development Finance claims to be one of the fastest-growing affordable housing lenders in the country with assets under management exceeding Rs 2,410 crore (around $300 million) across 9 states with 100 branches.
“Shubham is a leading provider of housing finance in India and with our solutions, we have impacted over 61,000 households and 140,000 individuals. We look forward to partnering these distinguished investors to lead Shubham,” said Rupa Basu, co-promoter and executive director, Shubham.
Nomura Financial Advisory and Securities India acted as financial adviser to Shubham and selling shareholders for this deal.
BII's investment in a housing finance companies has come as a slight sectoral deviation from its usual roadmap, considering the company’s recent investments have been around the green and renewables space. Earlier in June, BII subscribed to a $75 million “Green Basket Bond” to finance MSMEs across Southeast Asia and Africa. In March, British DFI earmarked $89 million (around Rs 676 crore) to clean energy capacity in India.
Speaking about the fund infusion in Shubham Housing, BII’s managing director and head of Asia, Srini Nagarajan said, “BII’s capital injection into Shubham will help increase access to homeowners through affordable housing finance and also support women’s economic empowerment.”
LeapFrog Investments, the second new investor in this round, is a private investment firm with a presence in 35 countries. The PE player primarily invests in businesses across Asia and Africa. It has raised over $2 billion from global institutional investors, including a recent $500 million commitment from Temasek.
“Access to quality housing is a critical step in improving sanitation, delivering clean water. LeapFrog is committed to Shubham’s vision of helping deliver home ownership to thousands of low-income Indian families for the first time, said Michael Fernandes, senior partner at LeapFrog.