37630 - Repco HFL

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Summary of Investment Information

Project Number

37630

Company Name

REPCO HOME FINANCE LIMITED

Date SPI Disclosed

May 3, 2016

Country

India

Region

South Asia

Projected Board Date

Jun 3, 2016

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Aug 3, 2016
Signed : May 31, 2017
Invested : Jun 14, 2017

Sector

Primary Mortgage Institutions

Project Description

The proposed project would involve an investment of up to INR 2,658.5 million (equivalent to US$40 million) in Non-convertible Debentures (“NCDs”) issued by – Repco Home Finance Limited (“RHFL”) The project is intended to support RHFL to increasing its reach and penetration 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	40.0
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. RHFL is 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 company, which is currently largely dependent on banks and NHB for their funding needs. The NCD''s will also provide RHFL with long term debt of 7 years which is also not readily available from the market.
- Demonstration Effect: IFC''s investment will provide comfort to other potential lenders and investors in providing debt to the company 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 company 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 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. Some of the home loan borrowers will undertake self-construction, repair, renovation and home extension activities, and most of these 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 company will put in place appropriate loan conditions and declaration form based on the applicable E&S regulations. The company will also upgrade its policy on employee grievance redressal. The project is categorized as FI-3.

Contacts

For Inquiries About the Project, Contact

Mr. S. Balaganapathy
Chief Manager, Investor Relations
Repco Home Finance Limited
Telephone: +91 44 42106650
Email: mailto:bala@repcohome.com

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