47475 - DCM IIFL Home

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Summary of Investment Information

Project Number

47475

Company Name

IIFL HOME FINANCE LTD

Date SPI Disclosed

Feb 9, 2023

Country

India

Region

South Asia

Projected Board Date

Apr 6, 2023

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

Aug 20, 2023

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : May 10, 2023
Signed : Jul 20, 2023
Invested : Aug 18, 2023

Sector

Primary Mortgage Institutions

Additional Project Attributes

Blended Finance

Project Description

The proposed project is a senior secured loan (or INR bond) of up to US$100 million equivalent to a new client, IIFL Home Finance Limited (IIFL HF or the Company), for a tenor of up to 6 years (the Project”). The Project will involve proceeds being used to promote affordable housing for women borrowers from Economically Weaker Sections (“EWS”) and Low Income Groups (“LIG”) segments. Discussions are also underway for part of the proceeds to be used for financing retail purchases of green affordable housing. The Company is in the process of discussing an Advisory project to help develop its green affordable housing business. The project is expected to be supported by the Market Accelerator for Green Construction (“MAGC”) Program as described in the Blended Finance Section.

Associated Advisory Engagement

IFC Advisory Services will potentially look into IIFL for a proposed engagement aimed towards sharing technical knowledge, building the company’s capacity to evaluate green housing opportunities, certification tool (EDGE) and reporting of green affordable housing that will help the firm develop and test its Green Affordable Housing value proposition in the self-construction segment.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	99.73
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

Project Outcome: Stakeholders Effect Improved access to affordable housing finance, including for women borrowers: IFC anticipates the Project will significantly increase access to housing finance and thus encourage homeownership in the EWS/LIG segments, including for women. Rapid urbanization in India has led to serious development challenges including congestion, pressure on basic amenities, and severe housing shortages in cities, especially, in the low-cost segment. India's mortgage market depth is low compared to emerging economies (India- 10% vs China - 18%, Thailand - 20%). This Project will increase access to housing finance for EWS/LIG segments, with a focus on women borrowers. Improved access to green affordable housing finance: Limited penetration of green housing is a key challenge in Indian housing market. IFC estimates total green buildings/housing investment opportunity of US$1.4 trillion in India from 2018-2030. The project will support IIFL HF in building its green affordable housing portfolio. Contribution to Market Creation Competitiveness: IFC’s support to the Project, along with IFC’s other systematic engagements in the segment, will promote greater competitiveness in the affordable housing market, including supporting the development of green affordable housing. Housing market in India is very active with banks, NBFCs and HFCs, however, a large portion focuses on higher income groups, and low & middle-income groups remain unserved/underserved. Although IFC has been supporting the development of affordable housing financiers through continued interventions, the shortage is substantial and would require continuous support. Climate finance deficit in India is large at US$448 billion, and the market for green affordable housing finance remains underdeveloped. Very few HFCs/FIs are focused on financing green buildings/housing, as green finance is perceived to be expensive and thus not considered suitable for the affordable housing segment.

Financial Additionality Financing Structure: IIFL HF's housing loan portfolio generates assets with average maturities of around 10 years. However, its borrowings tend to be medium dated-loans form. Around 67.3% of its total borrowing will mature in the next 5 years, with 50.1% of the total maturing within 3 years. In this context, IFC's proposed investment will make an impact in improving the average tenor and will help diversify the financing structure for the Company, as only c.5% of its borrowings are from DFIs/Foreign lenders. Diversification of financing will play a critical role in the growth of the Company especially given its current size. During appraisal, the team will also assess the viability of providing US$ denominated financing. Non-financial Additionality Knowledge, innovation, and capacity building: IFC will share its technical knowledge with IIFL HF through a potential Advisory assignment to build the company’s capacity to evaluate green affordable housing opportunities. IFC’s involvement will further strengthen IIFL HF’s green housing value proposition to clients, and help it build a strong pipeline.

E&S Category Rationale / Risks and Mitigation

The project entails a senior loan of up to US$ 100 million to IIFL Home Finance Limited (IIFL HF or the Company) for financing retail buyers of affordable housing (including green) units in India. The company primarily provides retail loans for the purchase, construction, and renovation of homes with a special focus on the economically weaker sections, low-income groups and women home-owners. 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. IIFL HF has adequate HR policies which are in line with IFC Performance Standard - 2 requirements and follows the applicable Life and Fire Safety requirements in its own operations.

Contacts

For Inquiries About the Project, Contact

IIFL Home Finance Limited
Mr. Ajay Jaiswal
Company Secretary
?+91 124 478 0964
ajay.jaiswal@iifl.com
No 98 Phase, 4, Phase IV, Udyog Vihar, Sector 19, Gurugram, Haryana 12201
https://www.iiflhomeloans.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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