47289 - Home First Debt

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Summary of Investment Information

Project Number

47289

Company Name

HOME FIRST FINANCE COMPANY LIMITED

Date SPI Disclosed

Oct 21, 2022

Country

India

Region

South Asia

Projected Board Date

Nov 30, 2022

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Dec 25, 2022

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Dec 8, 2022
Signed : Dec 16, 2022
Invested : Dec 23, 2022

Sector

Primary Mortgage Institutions

Additional Project Attributes

Blended Finance

Project Description

The proposed Project comprises of an up to INR 2.8 billion (approximately US$35 million) investment in Home First Finance Company Limited (Ltd) (Home First, the Company) through up to 7-year debt. The proceeds will be utilized to provide financing for retail buyers of affordable housing and green affordable housing units. The Project is expected to provide counter cyclical support for the housing needs of lower income groups, who have been severely impacted by the disruptions caused by the Covid-19 pandemic, as well as support green affordable housing, which is still underdeveloped in India, particularly in the affordable segment. Subject to internal approvals, the Project may receive support from the Market Accelerator for Green Construction (“MAGC”) Program as discussed in the Blended Finance Section.

Associated Advisory Engagement

IFC Advisory services has partnered with Home First for a proposed advisory engagement to support Home First in developing its green housing framework, including technical support for green housing evaluation parameters, operationalizing certification process and capacity building on green housing certification, monitoring and reporting. The advisory engagement also aims to build capacity for diversity and inclusion thereby helping Home First promote women home ownership and gender diversity within the organization.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	34.44
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 Loans to Individuals

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

Development Impact

Stakeholders impact: Improved access to affordable housing finance and green affordable housing finance: IFC anticipates that the investment will increase retail borrowers’ access to housing finance and green housing finance, and encourage homeownership for low-income segments. Rapid urbanization in India has led to several challenges including congestion, pressure on basic amenities, and severe housing shortages in cities, especially in the low-cost segment. Limited penetration of green housing is another key challenge in the housing market in India. IFC estimates a total green buildings/housing investment opportunity of US$1.4 trillion in India from 2018 to 2030. Market impact: Competitiveness: IFC’s support to the Project, along with IFC’s other systematic engagements in the affordable housing segment, will promote greater competitiveness in the affordable housing market in India, including supporting the development of green affordable housing. The housing market in India is very active with both banks as well as NBFCs and HFCs providing housing finance. However, a large proportion of the housing finance focuses on higher income groups, and low and middle-income groups remain unserved/underserved. Although IFC has been supporting the development of affordable housing financiers through continued interventions, the shortage of affordable houses and affordable housing finance is substantial and would require continuous ongoing support. In this context, the Project will demonstrate the viability of providing housing finance to lower-income groups at scale, and will also support the development of green affordable housing.

IFC will provide both financial and non-financial additionality through this Project. Financial additionality will be provided in the form of longer tenor financing, which will help in strengthening Home First’s Asset Liability Management. With respect to non-financial additionality, IFC will help in terms of: (i) knowledge, innovation and capacity building through the proposed advisory engagement, and (ii) Non-commercial risk mitigation. IFC’s investment will be a vote of confidence in Home First, providing comfort to other investors.

E&S Category Rationale / Risks and Mitigation

The project entails an investment of up to INR 2.8 billion (approximately US$35 million) to Home First Finance Company Limited (“Home First” or “the Company”) through senior secured Non-Convertible Debentures. The proceeds of the IFC investment will be used for financing retail buyers of affordable housing (including green) units in India. The company primarily provides retail lending to individuals for purchase, renovation, and extension of residential and non-residential property. The use of proceeds will be only for on lending to individual borrowers for purchase, renovation, and extension of residential property units and will not be used for any builder/construction finance or towards non-residential property. Hence, the proposed project presents no adverse environmental or social risks or impacts and is categorized as FI-3 in accordance with IFC's Environmental and Social Sustainability Policy. The proceeds will not be used to support any coal-related activities 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. Home First has adequate HR policies which are in line with IFC Performance Standard - 2 requirements and follows the applicable Life and Fire Safety requirements.

Contacts

For Inquiries About the Project, Contact

Home First Finance Company Limited
Sunil Anjana
Treasury Head
+91 22 67425118
sunil.anjana@homefirstindia.com
511, Acme Plaza, Andheri Kurla Road, Mumbai 400059
https://homefirstindia.com/

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