42529 - DCM Aavas NCD II

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Summary of Investment Information

Project Number

42529

Company Name

AAVAS FINANCIERS LIMITED

Date SPI Disclosed

May 16, 2019

Country

India

Region

South Asia

Projected Board Date

Jun 21, 2019

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Oct 24, 2024

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Jul 29, 2019
Signed : Sep 9, 2019
Invested : Sep 16, 2019

Sector

Primary Mortgage Institutions

Project Description

IFC proposes a debt investment of up to US$50 million in Aavas Financiers Limited (“AFL” or the “Company”) through subscription of Non-Convertible Debentures (“NCD”) issued by AFL or as loan under the External Commercial Borrowings (“INR ECB”) guidelines. The purpose of the proposed IFC investment is to expand the Company's affordable housing finance program in rural/semi-urban markets of Rajasthan and nearby states (the Project). About 65% of AFL’s customers are self-employed, majority of them have no formal proof of income, and almost 40% are first time borrowers; and about 85% of its financing is used for self-constructed single unit houses. AFL’s was awarded the “Best Housing Finance Company in Affordable Housing Segment” by the Government of India (GoI) at the National Summit on Affordable Housing in 2016 in recognition of its work in affordable housing finance.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
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

The Project is part of IFC's programmatic approach to develop the affordable housing finance market in India, where only 5% of adults have an outstanding housing loan and the housing shortage is estimated at over 60 million units. While expanding its mortgage portfolio, AFL will demonstrate its financially sustainable approach to serving the un(der)served segments, which can be replicated by others in the market.

E&S Category Rationale / Risks and Mitigation

The lending profile of AFL comprises retail home purchase loans, home improvement, and home extension/construction loans as well as MSME loans. IFC's loan will be utilized only for individual retail affordable home loans portfolio. The proceeds will not be used to support any coal-related activities, any builder finance or financing acquisition of land or higher risk business activities that may include significant Occupational Health and Safety risks or impacts on the environment, community health and safety, biodiversity, cultural heritage, involuntary resettlement or risk of adverse impacts on Indigenous Peoples. Hence, the proposed project presents no adverse environmental or social risks or impacts the project is categorized as FI-3 in accordance with IFC's Environmental and Social Sustainability Policy. Given the nature of activities to be supported there is no need for establishing ESMS. The company's HR policies and practices are in line with IFC PS-2 requirements.

Contacts

For Inquiries About the Project, Contact

Aavas Financiers Limited
Mr. Ghanshyam Rawat
CFO
+91 141 4659244
ghanshyam.rawat@aavas.in
201-202, Southend Square SP-1, 4th Floor, Mansarover Industrial Area, Jaipur – 302020
www.aavas.in

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