Indiabulls Housing Finance gets ₹2,200 cr lifeline from Oaktree

Indiabulls Housing Finance has pledged a part of its real estate loans to the global stressed assets investor

Gopika Gopakumar, Jayshree P. Upadhyay
Updated3 Jul 2020, 10:59 PM IST
The fresh funds are expected to be used to meet the company’s payment obligations.
The fresh funds are expected to be used to meet the company’s payment obligations.(Photo: Mint)

Indiabulls Housing Finance Ltd (IBHFL) has raised 2,200 crore from Oaktree Capital by pledging a part of its real estate loans to the global stressed assets investor, two people directly aware of the transaction said, requesting anonymity.

The transaction is expected to breathe a fresh lease of life into Indiabulls Housing, which has been in talks with investors for several months. The fresh funds are expected to be used to meet payment obligations.

As part of the terms of the deal, Oaktree will buy non-convertible debentures (NCD) to be sold by Indiabulls Housing, according to the people cited above. The NCDs will be guaranteed by an underlying real estate portfolio valued close to 4,500 crore, comprising loan exposures to developers such as Wadhwa Group and Sheth Developers.

A spokesperson for Indiabulls Housing did not respond to an email query. A spokesperson for Oaktree declined to comment.

In a similar transaction last year, now bankrupt Dewan Housing Finance Ltd ( DHFL) sold wholesale loans worth 1,375 crore to Oaktree to reduce its project finance loan book and raise immediate liquidity.

Indiabulls Housing’s business has been under pressure as is evident from ratings downgrades. In March, Moody’s Investors Service downgraded the home financier from B2 to B3, with a negative outlook, citing a challenging fund-raising environment. Rating agency ICRA had also downgraded the long-term rating of the company from stable to negative. The rating action was driven by Indiabulls Housing’s investment in Yes Bank’s additional tier I bonds and the continuing challenge of resource mobilization.

In May, Indiabulls group sacked almost 2,000 employees as part of measures to contain the fallout of the disruption caused by the coronavirus outbreak. The move came in the wake of the senior management of taking a 35% pay cut for fiscal 2021. Company chairman Sameer Gehlaut decided to forgo his entire salary for the fiscal, while vice-chairman Gagan Banga opted to take a 75% cut in remuneration.

The current debt refinancing is part of the first step that the company wants to use to handle the financial stress.

The outstanding loan book stood at 1.02 trillion, as of 31 December 2019, with an average cost of borrowing at 8.8%, according to the public filing by the housing finance company.

“Indiabulls is in talks with other private equity investors for a debt refinancing of nearly 7,000 crore. The second stage is raising funds via preferential issues. The recently relaxed pricing guidelines by the market regulator will make it easier,” said one of the persons cited above.

RBI on Wednesday laid down the eligibility criteria for non-bank financiers and mortgage lenders to utilize a special liquidity scheme approved by the Union cabinet in May.

RBI rules mandate that non-banking financial firms and housing finance companies should not have net non-performing assets of more than 6% as on 31 March 2019 and the funds raised will have to be solely used to extinguish existing liabilities.

“They should (also) have made net profit in at least one of the last two preceding fiscals of 2017-18 and 2018-19. They should not have been reported under SMA-1 or SMA-2 category by any bank for borrowings during the one year prior to 1 August 2018,” RBI said.

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:3 Jul 2020, 10:59 PM IST
Business NewsCompaniesNewsIndiabulls Housing Finance gets ₹2,200 cr lifeline from Oaktree

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Indian Oil Corporation share price

    138.90
    03:59 PM | 4 NOV 2024
    -6.1 (-4.21%)

    Tata Steel share price

    146.95
    03:56 PM | 4 NOV 2024
    -2.75 (-1.84%)

    Reliance Industries share price

    1,302.00
    03:59 PM | 4 NOV 2024
    -37.1 (-2.77%)

    Tata Motors share price

    824.10
    03:59 PM | 4 NOV 2024
    -19.5 (-2.31%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    City Union Bank share price

    178.10
    03:29 PM | 4 NOV 2024
    0.25 (0.14%)

    Federal Bank share price

    204.15
    03:59 PM | 4 NOV 2024
    -0.1 (-0.05%)

    Jubilant Pharmova share price

    1,252.35
    03:40 PM | 4 NOV 2024
    -11.65 (-0.92%)

    UTI Asset Management Company share price

    1,326.85
    03:29 PM | 4 NOV 2024
    -33.4 (-2.46%)
    More from 52 Week High

    Poly Medicure share price

    2,876.70
    03:43 PM | 4 NOV 2024
    -286 (-9.04%)

    Vodafone Idea share price

    7.89
    03:59 PM | 4 NOV 2024
    -0.56 (-6.63%)

    Chennai Petroleum Corporation share price

    614.70
    03:45 PM | 4 NOV 2024
    -40.85 (-6.23%)

    Angel Broking share price

    2,886.35
    03:59 PM | 4 NOV 2024
    -184.55 (-6.01%)
    More from Top Losers

    Fine Organic Industries share price

    5,123.00
    03:29 PM | 4 NOV 2024
    280.9 (5.8%)

    Firstsource Solutions share price

    358.85
    03:50 PM | 4 NOV 2024
    18.55 (5.45%)

    Rainbow Childrens Medicare share price

    1,630.70
    03:59 PM | 4 NOV 2024
    81.1 (5.23%)

    Gillette India share price

    10,323.35
    03:29 PM | 4 NOV 2024
    361.55 (3.63%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      80,415.000.00
      Chennai
      80,421.000.00
      Delhi
      80,573.000.00
      Kolkata
      80,425.000.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.92/L0.00
      Chennai
      101.03/L0.23
      Kolkata
      104.95/L0.00
      New Delhi
      94.77/L0.00

      Popular in Companies

        HomeMarketsloanPremiumMint Shorts