Bengaluru: Altico Capital India Ltd, a non-banking financial company (NBFC), plans to expand into the housing finance sector and acquire a retail lending portfolio, said a top executive.
Altico is in talks with a few housing finance companies, including Reliance Home Finance Ltd, and the due diligence process will start for the latter, he said.
“Housing finance complements our wholesale lending business. The valuations of housing finance companies were quite high earlier unlike today, when there are opportunities and platforms available at reasonable valuations. Our strategy to enter the housing finance business is not a reaction to what has transpired in the NBFC space in recent months, but this is an opportune time to enter this space," said Sanjay Grewal, chief executive, Altico Capital.
The NBFC had received board approval to enter the housing finance business nearly 18 months back, but is actively looking at it only now.
Altico is backed by Clearwater Capital Partners LLC, Abu Dhabi Investment Council and Varde Partners Inc.
A Reliance Home Finance spokesperson declined to comment.
“Reliance Home Finance is currently in talks with four potential buyers and one of them is Altico," said a person familiar with the transaction, requesting not to be named.
Last October, Altico had said that it plans to diversify into sectors like health, education and infrastructure in the next 18 months. Its diversification strategy was primarily to de-risk its investments, which are heavily dependent on the real estate sector, and seek opportunities outside.
The company also elevated former head of HSBC India, Naina Lal Kidwai, who has been an independent director in Altico since 2016, as its chairman.
The NBFC sector has been going through a tumultuous period after Infrastructure Financing & Leasing Services Ltd (IL&FS) defaulted on some of its debt obligations last year. Since then, most real estate-focused NBFCs have slowed down deployment to real estate projects and companies.
Grewal said while it expected a shorter crisis period, the NBFC has tried to be more prudent, conserve cash and raise long-term capital. Altico’s shareholders also put in around ₹350 crore of equity in March.
In the last seven months, on a loan book of ₹7,000 crore, ₹2,200 crore of loan pre-payments and repayments have happened, he said.
In the last five years, Altico has had only two non-performing assets (NPAs), of which one has been subsequently realized.
“Going forward, our strategy will be to focus on building the new housing finance business, deploy capital in newer sectors like health, education and warehousing, and finally, lend to high-quality developers, mostly in affordable housing projects," Grewal said.