Indiabulls Housing to raise Rs 50,000 crore growth capital next fiscal

MUMBAI: The second-largest mortgage lender Indiabulls Housing Finance is planning to raise Rs 50,000 crore next fiscal to fund its expected 15-20 per cent loan growth which will take its balance sheet near to the pre-pandemic peak when it had crossed the Rs 1-lakh-crore mark, a senior company official said on Monday.

The city-headquartered lender’s outstanding loan book stood at Rs 74,800 crore as of end-February, which is flat at the previous year’s level and if it grows by the upper end of the target it may close the next fiscal with around Rs 90,000 crore of loan book/AUM.

The board has passed an enabling provision allowing the company to raise up to Rs 50,000 crore to fund our loan growth next fiscal year-almost double of what we had raised last year at Rs 26,000 crore.

“We’ve taken the board permission to raise higher capital as we expect overall loan growth to be over 15-20 per cent next fiscal, and loan demand is likely to gather momentum from the second half,” Ashwini Hooda, the deputy managing director of Indiabulls Housing, told PTI on Monday.

This will be the first fund raising by the company after the founder Sameer Gehlaut in mid-December 2021 announced that he would leave the board (as a non-executive director) from March 31, 2022 and will also fully exit his holding in the company in a few years.

He holds 9.71 per cent stake now having sold 11.9 per cent last December to the Blackstone Group and the Abu Dhabi Investment Authority.

Following this, on March 14, Gehlaut, who founded the company, resigned from the board.

In his resignation letter, Gehlaut said, “I am leaving the company to make it a fully professionally managed and run-company. I recently sold 11.9 per cent of my stake and now owns 9.71 per cent which I intend to hold as its public shareholder to participate in its future growth story.”

Hooda said the company had raised only Rs 26,000 crore in the outgoing fiscal as loan growth was muted with a negative bias with the loan book touching Rs 74,800 crore.

Of this, commercial real estate book/builder loans stood at Rs 13,600 crore, which is down from Rs 20,900 crore. This declining number is part of our plan to fully exit this business vertical, he added.

It can be noted that one of the biggest reasons for the company’s failed takeover of Laxmivilas Bank in 2019 was the group’s high exposure to the trouble prone realty sector. The group was planning to convert itself as a bank with the takeover attempt.

Hooda said, typically the company raises 60 per cent from bank loans, 30 per cent through securitization and the remaining 10 per cent by issuing NCDs or foreign loans/ECBs.

Accordingly, of the Rs 26,000 crore it had raised so far this fiscal, Rs 1,300 crore came from bonds, around Rs 2,000 crore from foreign bonds and around Rs 8,000 crore from securitization and the remaining Rs 14,000-15,000 crore from banks.

On average, its cost of funds in FY22 stood at 7.5 per cent but he expects the same to inch up next fiscal, given the pressure from inflation.

Hooda said despite muted growth, asset quality remains stable so far this fiscal with gross NPAs only 3.25 per cent or Rs 2,000 crore. But the company has 150 per cent provision coverage ratio or Rs 3,000 crore has been provided for. So there is no worry about a fourth wave or any other eventuality, he said.