The proposed fund raising, which is subject to approval from the Reserve Bank of India, is intended to help DHFL grow its assets, increase its reach and improve its market share.
According to IFC, this would involve a Senior loan of up to $70 million to DHFL, a co-investment from the Canada Climate Change Program (CCCP) where IFC will act as implementing entity for CCCP to support climate change investments.
Established in 1984, DHFL's objective is to provide affordable housing finance options to the lower and middle income groups in India. DHFL offers both housing loans (house purchase, construction, extension and project loan) and non-housing loans (loan against property, lease rental financing, and purchase of commercial premises).
Its shareholders include the Wadhawan family and other promoters who hold 36% stake while the remaining 64% stake is in the public domain (institutional shareholders hold 43% and other bodies corporate/individuals hold the balance 22% stake).
IFC said that it's investment would demonstrate the viability of offering housing finance to LMI clients. While housing finance is one of the lowest risk asset classes in India's financial sector, mainstream commercial institutions have so far shown limited interest in this segment.
DHFL is dependent on banks for 70% of its funding needs. Funding from IFC will ensure diversity of funding profile for the company.