Leading NBFC, IIFL Finance, on Thursday struck a mega deal with the Abu Dhabi Investment Authority (ADIA) to invest heavily ₹2,200 crores for the purchase of 20 stakes in wholly owned subsidiary IIFL Home Finance. ADIA will invest in IIFL Home Finance through its wholly owned subsidiary.
In its statement, IIFL Finance said it would be one of the largest equity investments in the affordable housing finance segment in India by a financial investor.
IIFL Home Finance offered to use the additional capital to pursue its strategy of granular expansion into new markets to meet the large and growing demand for home loans.
Completion of the deal is subject to regulatory approvals, he added.
“This investment aims to support the company in its next phase of growth, as it addresses the significant demand from India’s vast, underserved and rapidly growing affordable housing finance market,” said Hamad Shahwan Aldhaheri, Executive Director of the Private Equity department at ADIA.
IIFL Home Finance is a subsidiary of IIFL Finance. “The deal is subject to regulatory approvals,” the non-bank lender added.
The affordable housing finance company also said it aims “to use the additional capital to continue its strategy of granular expansion into new markets to meet the large and growing demand for home loans.”
Nirmal Jain, Founder of IIFL Group, said, “We are delighted to partner with ADIA who bring to the table a long-term commitment and a wealth of experience supporting growing businesses. The investment recognizes IIFL Home Finance’s position as one of the largest providers of affordable home loans in India and its position to continue targeting the large, resilient home finance market.
Avendus Capital and IIFL Securities acted as financial advisors to IIFL Home Finance for this transaction. The deal would mean considering greater value in IIFL Finance, which has a market capitalization of Rs 12,500 crore and a loan book of Rs 52,000 crore. On the other hand, with a market value of Rs 11,000 crore, IIFL Home Finance has a portfolio of loans worth Rs 24,000 crore.
IIFL Home Finance is a wholly owned subsidiary of IIFL Finance engaged in the business of providing home loans, home loans and construction finance. The company has assets under management of Rs 23,617 crore as of March 31, 2022.
IIFL Finance is one of India’s leading retail-focused diversified NBFCs engaged in the loans and mortgages business with its subsidiaries – IIFL Home Finance and IIFL Samasta Finance.
Movement of stock
Shares of IIFL Finance gained 10.25% to Rs 362.75 against the previous close of Rs 329 on BSE. The stock opened with a gain of 8.21% at Rs 356 today. IIFL Finance stock is trading above the 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
In one year, the stock has gained 36% and rises 30% in 2022. A total of 81.12 lakh shares changed hands, representing a turnover of Rs 272.94 crore on BSE. The company’s market capitalization rose to Rs 13,746 crore
Nirmal Jain and his family hold a 25% stake in IIFL Finance. The Fairfax group of the Canadian investor Prem Watsa and the British group CDC Group plc hold 22.3% and 7.7% respectively. Other IIFL Finance investors include General Atlantic, Bain Capital and The Capital.