World Bank’s IFC to invest $200 million in HDFC

World Bank’s investment arm International Finance Corp. (IFC) says will invest $200 million by buying five-year non-convertible debentures (NCDs), or masala bonds


The IFC investment will be used by HDFC for on-lending to developers of affordable housing projects across India. Photo: Pradeep Gaur/Mint
The IFC investment will be used by HDFC for on-lending to developers of affordable housing projects across India. Photo: Pradeep Gaur/Mint

Mumbai: International Finance Corp. (IFC) is planning to invest as much as $200 million in India’s largest mortgage lender Housing Development Finance Corp. Ltd (HDFC).

The World Bank’s private-sector investment arm said it will invest by buying five-year non-convertible debentures (NCDs) or masala bonds.

The funds will be used by HDFC for on-lending to developers of affordable housing projects across India.

“HDFC has additionally committed to allocate up to Rs42 billion ($600 million equivalent) from its own resources for on lending to developers of affordable housing projects in India,” IFC said in a statement.

Mumbai-based HDFC currently has a customer base of 5.7 million and a loan portfolio of approximately Rs2.8 trillion as of December 2016.

Apart from HDFC, IFC has backed other mortgage lenders in the past including Dewan Housing Finance and PNB Housing Finance Ltd.

Affordable housing has received a lot of attention after finance minister Arun Jaitley in the 2017-18 budget said the government plans to accord infrastructure status to affordable housing and facilitate higher investments, in line with the government’s aim to provide housing for all by 2022.

In April last year, IFC said it planned to invest up to $38 million in three housing finance companies — Aspire Home Finance Corp., Micro Housing Finance Corp. and Aptus Value Housing Finance India Ltd. Last week, IFC said it plans to invest up to $40 million in housing finance firm Aavas Financiers Ltd.

In a separate statement, IFC said that it plans to invest $10 million in the first fund of early-stage venture capital firm Stellaris Venture Partners. Stellaris has a target corpus of $100 million and made the first close of its fund —Stellaris Venture Partners India I— at $50 million in January. The firm expects the next close in June.

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