Warburg-Backed Indian Lender Plans IPO to Tap Demand for Homes
Indian five hundred rupee banknotes are arranged for a photograph in Mumbai, India(Photographer Dhiraj Singh/Bloomberg)

Warburg-Backed Indian Lender Plans IPO to Tap Demand for Homes

India’s Home First Finance Co. is seeking to raise as much as 2.5 billion rupees ($34 million) from an initial public offering in the next few weeks as the mortgage provider backed by Warburg Pincus LLC taps rising demand for housing.

The country’s first non-bank mortgage lender to sell shares in over two years will offload about a 25% stake after delaying the plans in early 2020 due to the pandemic, Chief Executive Officer Manoj Viswanathan said in an interview.

“Housing demand has come back,” he said by phone. “The repayment track record for housing loan customers is much better than other segments, which is why we are confident about growth prospects.”

The 10-year-old mortgage provider, which typically lends to low-to-middle income borrowers such as grocery shop owners and junior executives, provides loans with an average size of 1 million rupees.

Loan Resurgence

Reeling under a liquidity crisis that started in 2018, several shadow banks -- which are less tightly regulated than real banks and typically provide credit to riskier businesses and individuals -- scaled back their businesses as they struggled to survive.

Now, with the coronavirus pandemic prompting a resurgence in home sales, some lenders are optimistic about future loan growth. Viswanathan is aiming for an annual loan growth of 30% during the next financial year, almost double previous levels.

Private equity investor Warburg Pincus bought a 25% stake in Home First for 7 billion rupees in October. Other investors such as Singapore’s GIC Pte Ltd. owns 22% of the lender, True North 33% and Bessemer Venture Partners 11%, Viswanathan said.

©2021 Bloomberg L.P.

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