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Shriram Housing Finance has raised $50 million in its first external commercial borrowing (ECB) as the lender looks to diversify its funding source.
Proceeds from ECB will be used for financing affordable housing,
mortgage lender, which is part of Shriram Groupraised funds from Canara BankA company official said the London branch is 200 basis points above the safe overnight financing rate (SOFR).
This fund was raised for three years. With the one-year hedging cost, the total cost comes to 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 keep multiple avenues open to raise funds,” managing director Ravi Subramanian told ET.
“We will consider this method of raising funds in future as well. While we haven’t set any target internally, we expect to raise another $150 million this year.” He said global investors are keen to take advantage. 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. With a 44% CAGR growth in its loan portfolio in the last four years, it is one of the fastest growing companies in the affordable housing sector.
The company is on track to achieve INR 10,000 crore AUM by September and expand it to INR 13,000 crore by March next year. Nearly three-fourth of its business comes from the western and southern states, with an average loan size of Rs 16.6 lakh.
The company also borrows from banks, debt capital market and obtains refinance National Housing Bank, Securitization by issuing pass-through certificates is another way of raising funds for it.
To support the growth momentum, the company is also looking to raise its equity to around $100 million by the end of this financial year. Parents Shriram FinanceThe company, which holds 85% stake in the housing subsidiary, is looking to reduce its stake by 10-20%.
“We are still debating how to infuse capital into the housing finance company. The debate is whether we should infuse capital or should we unlock value by diluting 10-20% of our stake, or an initial public offering should go for, Shriram Finance Managing Director YS Chakraborty had told ET after the fourth quarter earnings call.
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