IFC plans to invest $200 mn in HDFC by subscribing NCDs

IFC proposes to invest around $200 million in HDFC by subscription of its five-year-old non-convertible debentures (NCDs) or Masala Bonds.
 

IFC said it proposes to invest up to Rs 14 billion ($200 million equivalent) in HDFC through an IFC subscription of its five-year non-convertible debentures or Masala Bonds. HDFC has additionally committed to allocate up to Rs 42 billion ($600 million equivalent) from its own resources for on lending to developers of affordable housing projects in India.
 

The proceeds from IFC’s current investment shall be utilised across India, said IFC.
 

IFC will provide continued support to HDFC as the company develops its affordable housing business through the IFC investment process, including compliance with enhanced E&S related due diligence during its project appraisal process.

The proposed project will create a large dedicated pool of funding that would help jumpstart the market with a big impact. Partnering through the proposed project, IFC and HDFC expect that this demonstration would encourage other like-minded HFCs, FIs, banks and investment funds to follow suit and produce impact, much bigger than the direct funding of the proposed project, said IFC.
 

IFC was an initial investor in HDFC in 1978 and followed it with subsequent investments during 1987 and 1992. It has also provided multiple rounds of debt over the past many years. IFC and HDFC Investment Ltd. Have partnered together to develop nascent mortgage markets and have been co-investors in housing finance companies in Egypt, Bangladesh, Sri Lanka, and Maldives.