40814 - HFCII

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Summary of Investment Information

Project Number

40814

Company Name

APTUS VALUE HOUSING FINANCE INDIA LIMITED

Date SPI Disclosed

May 1, 2018

Country

India

Region

South Asia

Projected Board Date

May 31, 2018

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Jan 10, 2019

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Dec 11, 2018
Signed : Dec 24, 2018
Invested : Jan 8, 2019

Sector

Primary Mortgage Institutions

Project Description

The proposed investment comprises an up to US$15 million in Aptus in the form of senior secured Non-Convertible Debentures (NCDs) with a tenor of 7 years. The project is intended to support a Housing Finance Company (HFC) in increasing its reach in the affordable housing finance segment.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	15.51
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

(i) Providing housing to the economically weaker segments: Aptus is focused on providing access to housing finance to low income borrowers, specifically those employed in the informal sector such as self-employed 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. (ii) Increase competitiveness of smaller HFCs: The market is highly concentrated with top 5 HFCs having more than 70% market share. By supporting a smaller HFC targeting affordable housing, IFC will increase their competitiveness, market share and promote growth of the segment.

(i) Long Term Partner: IFC first engaged with Aptus in 2016 through a US$15mn NCD investment. The proposed transaction positions IFC as a long-term partner to one of the leading affordable housing financiers in South India as it seeks to further deepen its rural outreach. (ii) Diversification of Funding Source: IFC's previous investment was the first NCD for Aptus. Since then the Company has raised further funding through this route affirming IFC's demonstration effect and helping Aptus diversify away from bank borrowing. NCDs now comprise 26% of total debt funding. The proposed investment would help Aptus further diversify its funding base which is vital to meet its expansion target over the next few years. (iii) Capacity building: IFC is exploring ways by which it can help Aptus improve its processes and technology through advisory assignments to enable it reach the next level and help it deliver on its objectives of larger branch/asset size and increased penetration.

E&S Category Rationale / Risks and Mitigation

IFC will provide senior loan to Aptus for onlending 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. This present minimal to no E&S risks and impacts and hence the project is categorized as category FI-3. Applicable requirements will include IFC Exclusion List and National Laws and regulations. While most of the intended onlending will be for retail home loan borrowers, some of the borrowers may undertake self-construction, renovation and home extension activities. 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, which are covered through existing loan agreement with the borrowers. Aptus HR policies are in line with IFC PS-2 (Labour and working conditions).

Contacts

For Inquiries About the Project, Contact

Aptus Value Housing Finance Limited
Mr. Balaji P
EVP & Chief Financial Officer
+9144-45650000
balaji.p@aptusindia.com
Chennai, Tamil Nadu 600010, India.
http://www.aptusindia.com/

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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