HDFC to raise $75 mn from IFC

Will use funds to provide affordable housing finance in low income states in India

Housing Development Finance Corporation Limited (HDFC) is planning to raise around $75 million from International Finance Corporation (IFC).

According to the Corporation, the proposed investment consists of a senior loan of up to $75 million.

The proceeds from the proposed loan investment will enable HDFC to provide affordable housing finance to the underserved market of low to lower-middle income households in low income states in India.

The above project is subject to HDFC receiving regulatory approvals, IFC’s management and board approvals and execution of mutually satisfactory documentations between HDFC and IFC.

Since the project is proposed for individual housing finance under the affordable housing scheme, it presents no E&S risks and therefore has been classified as category FI-3. There will be no E&S requirements on the Company.

The provision of significant volumes of affordable housing finance in low income states will spur affordable housing construction in these states with positive linkage impacts on employment and growth, said the Corporation.

It added that given the limited avenues of long term sources in India, IFC's partnership with HDFC would provide it access to long term tenor funds critical for supporting the nascent affordable housing segment in India.

HDFC was incorporated in 1977 as a specialied mortgage institution with the primary objective of meeting a social need of encouraging home ownership by providing long-term finance to households. It has over time evolved into a financial conglomerate, diversifying into other businesses through its subsidiaries -- HDFC Standard Life Insurance (72.4%), HDFC Asset Management Company (59.9%), HDFC Bank (23%), and HDFC General Insurance Company (73.9%).

As on January 25, 2013, the shareholding pattern consisted of 73.36% foreign shareholders, 9.97% individuals, 10.53% financial institutions banks and insurance companies, 2.76% mutual funds, and 3.04% companies. Below are the shareholders holding more than 2% of HDFC.

The key shareholders include Euro-pacific Growth Fund (4.65 %), Oppenheimer Developing Markets Fund (2.42 %), ICICI Prudential Life Insurance Company (2.07%).

HDFC is headquartered in Mumbai and has a branch network of 326 offices (which includes 80 offices of HDFC's wholly owned distribution company HDFC Sales Private Limited) catering to over 2,400 towns and cities spread across the country.