Lic Housing Picks Up Citi Portfolio

LIC Housing Finance Ltd has acquired a housing loan portfolio amounting to Rs 202 crore from Citibank NA.

This is the second acquisition of a loan portfolio made by LICHFL after GLFL Housing Finance, as it believes in inorganic growth.

Enam Financial Consultants director Vallabh Bhansal told Business Standard: "Citibank wanted to shed some of its assets, and LIC Housing has been looking to acquire assets".

Enam structured the deal and advised both sides. This a true sale of assets and LIC Housing will hence receive the equated monthly instalments (EMI) unlike in the case of mortgaged-backed securities.

LIC Housing managed to acquire the assets at a discounted rate of 10 per cent which, explained the company's officials, translates into a spread of over 200 basis points of the company's incremental cost of funds.

 

Bhansali added that the acquisition has been made at competitive rates. LIC Housing deputy manager Sudipto Sil said: "Inorganic growth is something no housing finance company can do without today."

Citibank's pool of assets acquired have been cherry-picked by the housing finance company, which have a balance duration of 13 to 14 years. Considering LIC Housing's direct disbursement figure of over Rs 2,000 crore last fiscal, this acquisition of assets amounts to 10 per cent of last year's disbursal figure. It will add to LIC Housing's book size which currently stands at over Rs 6,500 crore.

LIC Housing this week raised Rs 185 crore from the market at a rate of 7.8 per cent for a five-year non-convertible debenture. This is part of its Rs 1,200-crore borrowing programme.

This company also slashed the interest rate on its floating rate loans by 50 to 150 basis points to 9.5-10.5 per cent this week, depending upon the tenor of the loans. It has reported a growth of 32 per cent in net profit.