37555 - HFC Facility

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Summary of Investment Information

Project Number

37555

Company Name

MOTILAL OSWAL HOME FINANCE LIMITED

Date SPI Disclosed

Apr 11, 2016

Country

India

Region

South Asia

Projected Board Date

May 13, 2016

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Oct 25, 2025

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jun 19, 2016
Invested : Jul 26, 2016

Sector

Primary Mortgage Institutions

Project Description

India Affordable Housing Finance Project (“the Project)

The proposed project would involve an investment of up to US$38 million in Non-convertible Debentures (“NCDs”) issued by – Aspire Home Finance Corporation Limited (“Aspire”) Micro Housing Finance Corporation Limited (“MHFC”), and Aptus Value Housing Finance India Ltd. (“Aptus”). The project is intended to support the housing finance companies (“HFCs) in increasing its reach in the affordable housing finance segment.

The proposed investment is consistent with the World Bank Group’s India Country Partnership Strategy (CPS) as it aligns with the engagement areas of (i) Inclusion – by improving access to affordable housing finance and enhancing investment in the low income states (ii) Transformation – through job creation by supporting the labor intensive affordable housing segment and (iii) Integration – giving increased access to financial services in Tier II and Tier III cities.

Associated Advisory Engagement

None at the moment.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	37.53
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Housing Finance

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

- Providing housing to the economically weaker segments: According to the housing plan of the Government of India, about 100 mn homes must be built in India, 95% of which will be in the economically weak and low-income categories - affordable housing segment. The above HFCs are exclusively focused on providing access to housing finance to low income borrowers, specifically those employed in the informal sector such as self-employed micro-entrepreneurs and un-organized sector salaried workers. This segment is largely ignored by the large HFCs and Banks owing to perceived higher risk profile of such borrowers and difficulty in credit assessment. IFC''s investment will directly expand the availability of housing finance to the low income and relatively excluded customer segments.

- Job Creation: The construction industry is one of the largest employers of labour in urban India and affordable housing is the most labour intensive construction, providing high potential for employment opportunity to the urban poor. The provision of significant volumes of affordable housing finance will spur housing construction with positive linkage impacts on employment and growth.

- Diversify Funding Profile: IFC debt will help diversify the funding profile of the Companies who are currently largely dependent on banks and NHB for their funding needs. It will also provide them with long term debt of 7 years which is also not readily available.
- Demonstration Effect: IFC''s investment will provide comfort to other potential lenders and investors in providing debt to the covered HFCs and also to others operating in affordable housing segment.
- Best Practices: IFC, through its global experience with HFCs is uniquely positioned to support and advice the Facility HFCs on their strategy and industry best practices in corporate governance, product design and other key functional areas such as treasury management and risk management.

E&S Category Rationale / Risks and Mitigation

The Housing Finance facility of IFC will provide funding to eligible housing finance companies under the affordable housing category. The use of proceeds will be for on lending to retail home loan borrowers for purchase, construction, extension, improvement of individual dwelling units. The funds will not be used for financing acquisition of land or financing a builder/real estate project. While most of the intended on lending will be for retail home loan borrowers, some of the borrowers will undertake self-construction, renovation and home extension activities. Most of these self-construction/renovation related activities will be of short duration. Hence the E&S risks and impacts will be minimal and primarily related to use of labour, and disposal of construction/demolition waste. For this the eligible HFC will put in place an simplified E&S checklists and declaration form based on the applicable E&S regulations. The eligible HFC will need to comply with IFC PS-2 (Labour and working conditions).

Contacts

For Inquiries About the Project, Contact

For Aspire:

Mr Kalpesh Ojha
Chief Financial Officer
Aspire Home Finance Corporation Ltd
Motilal Oswal Tower
Gokhale Road
Prabhadevi, Mumbai 400 025, India
Email: mailto:Kalpesh.ojha@ahfcl.com

For MHFC:

Mr. Rajnish Dhall
Managing Director
Micro Housing Finance Corporation Ltd.
3 Victoria Building, 1st Floor, S A Brelvi Road
Off Horniman Circle, Fort - Mumbai – 4000001, India
Email: mailto:rajnish.dhall@mhfcindia.com

For Aptus:

Mr. Balaji P
Chief Financial Officer
Aptus Value Housing Finance India Ltd
8B, Doshi Towers; 205, Poonamallee High Road Kilpauk,
Chennai, Tamil Nadu 600010, India
Email: mailto:balaji.p@aptusindia.com

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