Mumbai: Fresh capital in hand after a change in ownership, Sammaan Capital, the erstwhile Indiabulls Housing Finance, is looking beyond mortgages to diversify its loan book and build a multi-product non-bank entity, according to managing director and chief executive officer Gagan Banga.
“This is growth capital, we have clearly charted out a very detailed business plan, where we are trying to make it a customer-centric franchise, targeting 5 crore borrowers in the next three years and making this from a mortgage-focused to a multi-product NBFC,” Banga told Mint. He expects the company's assets under management (AUM) to double in three years to around ₹1.3 trillion.
Abu Dhabi-based IHC has infused ₹5,652 crore for a 41.5% stake in Sammaan Capital, through its affiliate Avenir Investment RSC. IHC has now become the promoter of the NBFC, which is set to receive another ₹3,198 crore over the next 18 months upon conversion of warrants into fully paid equity shares. Assuming full uptake in the open offer, IHC’s shareholding in the company will increase to 63.3%.
Business strategy
Over the next three years, the first phase of the growth plan, the NBFC plans to venture into new product segments such as personal loans, gold loans and MSME loans. Banga said all product lines will be “evaluated”.
“We will look at every loaning product, and whichever in the context of where we are in the consumer credit cycle makes sense, we will pursue that,” Banga said, adding the company expects to take 24-36 months to gain scale on these new product lines.
As these products gain scale and reach around 300 cities, the company will start allocating management bandwidth to phase two of the strategy. This includes getting into products that are “complementary to the entire lending opportunity” but are better managed through an alternative investment fund (AIF) route, rather than through an NBFC. This is likely to include the stressed asset and secured credit segments, which Banga believes are “low hanging” opportunities.
Thereafter, in another two years or under phase 3, Sammaan Capital will start looking at other financial segments such as insurance and broking and related services.
“That time, we will be leveraging our strength of a large customer base. Between now and then, there could be possibility in a fund structure and a stressed asset opportunity,” Banga said. “We want to do businesses where there is eminent profitability coming out of either our skill set of managing liabilities or that we will deploy capital and get some return out of that.”
Parentage change
Still coming out of the shadows of its previous avatar Indiabulls Housing Finance, Banga believes the change in ownership and parentage will go a long way in helping rebuild the NBFC.
“With this, it is like one clean shot and now you start with a clean slate. They (IHC) have been very focused on making sure that before they come, the balance sheet is squeaky clean, the right type of governance structures are there because there is zero-tolerance for any nonsense,” Banga said.
While the focus for Sammaan was on stabilizing the company through the fund raise and bring in a strong promoter for the next phase of growth; IHC on its part was looking for a partner who could operate at scale “almost immediately”.
“This is IHC's financial services foray into India and they want to look at India as a marketplace for all financial services,” Banga said, adding that a large balance sheet and access to various pools of capital will allow the parent to explore “everything” over the course of the next five years.
The idea, he believes, is to cater to the entire low- to mid-income segment in India, be a mass market lender, be physically present in 500 cities and use the IHC parentage and tech-focussed ecosystem to improve the cost of fund structure and operational efficiency.
Banga said the deal is expected to help the company's local credit ratings go up by multiple notches, which should help cost of funds ease by around 200 basis points over the next three to four months.