The US International Development Finance Corporation (DFC) has sanctioned a $20 million long term loan for Gurgaon-based Ummeed Housing Finance to fund housing needs of the economically weaker and middle-income groups.
The American funding body will provide the debt at a 4.25% fixed rate for 15 years, Ummeed’s founder and managing director Ashutosh Sharma said.
“This DFC facility would allow us to extend longer tenure credit to the underbanked population to assist with home purchases, construction, and extension. This will also help us diversify the wagon wheel of liability while the funding is attractive from an interest rate perspective,” Sharma told ET.
The all blended cost of this borrowing including the hedging cost for five years would be anything between 8-9%, he said. The loan carries a two-year moratorium.
The size of the debt would be Rs 160 crore in local currency and the company plans to start drawing down the fund in the next three months or so. The lender plans to finance around 2,000 low-ticket mortgages with this.
“This is an important transaction that will provide vital financing to support increased access to affordable housing in India,” said James Polan, vice president of DFC’s office of development credit.
The affordable housing finance in India has seen significant traction in recent years and is expected to experience further expansion with increasing urbanisation, a rising middle-class population, and steady policy support from the government.
Given the growth opportunities, Ummeed is planning to raise equity next year from its existing as well as new investors. Norwest Venture Partners, Morgan Stanley Private Equity Asia, Lightrock and local investor CX Partners together own 74% in the company while the balance is held by promoter Sharma and other key employees.
Starting in 2016, the mortgage lender with affordable housing focus with average loan size around Rs 9 lakh has created Rs 1355 crore assets under management by August end and aims to grow it to Rs 1800 crore by the end of this fiscal.
“Our programme strongly encourages women co-ownership on these loans and properties,” Sharma said.
The lender plans to take its branch network to 100 by the end of the year from 86 at present. The number of branches was 70 at the end of FY23 with 84% being in tier 2 and smaller towns.
