Sundaram Home Finance, which is getting ready for its foray in the affordable housing loan segment, plans to raise Rs 2,500-3000 crore in the second half of the fiscal for funding growth.
The mortgage lender is targeting 20-25% business expansion this fiscal. Its assets under management at present is around Rs 11000 crore.
The company with 90% branch and business concentration in the southern market is setting up a dedicated team for the affordable loan segment. The official launch is planned in January, managing director Lakshminarayanan Duraiswamy told ET.
“To fund our growth, we have raised about Rs 2000 crore in the first half of the year and plan to raise another Rs 2500 crore to Rs 3000 crore in the second half of the year,” the MD said.
The fund would be raised through a mix of term loans from banks, non-convertible debentures, fixed deposits and refinance from National Housing Bank. Duraiswamy said for short term fund requirements, it may explore commercial papers.
The lender, wholly-owned by Sundaram Finance, has no immediate plans for raising equity capital.
The company is now busy putting in place a dedicated team of around 75 people for its affordable housing plan.
“We are still in the drawing board stage as this requires a different flavour in terms of understanding the customer and underwriting. One size won’t fit all
in this segment. We expect to formally launch in January though the people and the branches will be in place before that,” Duraiswamy said.
The lender mostly operates in the tier 2 and 3 segments.
The MD said that the affordable segment foray provides a natural synergy with
the segments it is already present.
With this new plan, the company is looking to consolidate its southern presence.
“Given our current size and our growth aspirations, we believe that there are enough opportunities for us to grow here. We don’t plan to post a flag in a new state where we are not already present,” Duraiswamy said.
“The prime housing segment is becoming increasingly crowded with the banks pushing the boundaries on housing finance. Banks are not as much into affordable housing because there are a lot of nuances that need to be understood in this segment, ability to underwrite customers and collection capabilities, all of which come naturally to housing finance companies,” he added.
