Shriram Housing Finance has successfully raised $50 million through its maiden external commercial borrowing (ECB) to diversify its funding sources. The funds will be used to finance affordable housing projects. The three-year borrowing comes at an overall cost of around 8.4 percent, including the one-year hedging cost, aligning with the company's average borrowing cost. Shriram Housing Finance aims to raise an additional $150 million this year, taking advantage of the growing interest from global investors in India's affordable housing finance sector. The company also utilises other funding avenues such as bank loans, debt capital markets, and securitization.
Shriram Housing Finance, a pioneer in the realm of affordable housing, has successfully secured $50 million through its maiden external commercial borrowing (ECB) initiative, signalling its commitment to expanding its funding sources. The funds procured will be channelled towards bolstering the financing of affordable housing projects, aligning with the company's unwavering dedication to providing accessible housing solutions. Leveraging the expertise of Canara Bank's London branch, the ECB transaction was executed at a favourable margin of 200 basis points over the Secured Overnight Financing Rate (SOFR).
The official confirmed that they raised the funds for a three-year tenure, which resulted in an overall cost of approximately 8.4 percent, including the one-year hedging cost. This aligns closely with the company's average borrowing cost of 8.5 percent. It's worth noting that one basis point represents a minute change of 0.01 percentage points. This strategic funding arrangement allows Shriram Housing Finance to tap into diverse capital pools and pursue its growth trajectory.
Ravi Subramanian, the Managing Director of Shriram Housing Finance, emphasized the significance of diversifying funding avenues to support growth. He shared his optimism about future fundraising endeavours and expressed a goal to raise an additional $150 million within the current fiscal year. Global investors have shown a keen interest in leveraging the immense potential of the affordable housing finance sector in India, further underscoring the company's growth prospects.
Having already financed an impressive 1.36 lakh housing units, Shriram Housing Finance boasts a robust loan book of Rs 9,000 crore as of June. Demonstrating a steadfast growth trajectory, the company has achieved a remarkable compound annual growth rate (CAGR) of 44 percent in its loan portfolio over the past four years. Aligning with its ambitious targets, the company aims to achieve an Assets Under Management (AUM) of Rs 10,000 crore by September, with plans to further expand it to Rs 13,000 crore by March next year. In addition to external commercial borrowing, the company also obtains funding from banks and the debt capital market and secures refinancing from the National Housing Bank. It further engages in fundraising through securitization by issuing pass-through certificates.
To support its growth momentum, Shriram Housing Finance is exploring avenues to augment its equity capital by approximately $100 million by the end of the fiscal year. The parent company, Shriram Finance, which holds an 85 percent stake in the housing subsidiary, is actively evaluating options to infuse capital or strategically dilute its holding by 10–20 percent to unlock value and fuel the subsidiary's expansion plans. By exploring innovative financing options and nurturing strategic partnerships, Shriram Housing Finance remains steadfast in its commitment to providing affordable housing solutions and driving positive change in the housing finance landscape.
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