Indiabulls Housing Finance To Borrow Conservatively Amid Macro Headwinds: MD Gagan Banga

WATCH | MD Gagan Banga On Indiabulls Housing Finance’s Fundraising Plans

Indiabulls Housing Finance Ltd. will be raising money carefully in the face of challenges affecting India’s shadow lending space, Vice-Chairman and Managing Director Gagan Banga said on Tuesday, a day after the mortgage lender’s shares slid an unprecedented 38 percent on a court-ordered graft probe.

“There are macroeconomic challenges, both for the overall economy as well as the sector. It’s best to be very conservative (while raising money),” Banga said, adding that his approach towards borrowing should be one where the assets under management grow instead of the balance sheet.

Indiabulls Housing Finance’s shares slid 38.5 percent to Rs 240.10, its biggest fall since listing in July 2013. The company’s $350 million or 6.375 percent notes due on 2022 slid to a record low of 80 cents, according to prices compiled by Bloomberg. Indiabulls Housing has about 40 percent bank borrowings and bonds and about 20 percent other means including external commercial borrowings.

“The country needs to sort out the bond markets. With shallow bond markets, you cannot afford to take two-year to three-year bonds, wrap that up and try and finance an asset maturing in five to six years,” he said, citing that even a minor asset-liability mismatch now will be risky.

The Delhi High Court and the police moved last week to start separate investigations into allegations of fraud and misappropriation levelled against Indiabulls Housing Finance and The Lakshmi Vilas Bank Ltd., with which it has sought approval to merge. A fall in shares of Lakshmi Vilas Bank after the Reserve Bank of India imposed curbs on its lending limits on Monday also put pressure on Indiabulls Housing Finance.