Big money finds new love in an old sector

livemint.com:

Subscribe to enjoy similar stories. India's housing finance sector saw a tenfold jump in primary fundraising in 2024, as venture capital and private equity firms sought to diversify their portfolios with assets perceived as relatively less risky. Rising housing demand, as well as the ability of mortgage lenders to contain costs at crunch times and generate sustained returns have attracted investments, investors and industry experts said.

As more opportunities open up beyond the metros, they expect the momentum to continue in 2025 as well. In 2024, housing finance companies raised a total of $826.8 million across nine rounds against $82.6 million spanning five rounds a year earlier, data from market intelligence provider Tracxn showed. Some recent deals include Vastu Housing Finance’s $100 million fundraise from Prosus in December, and Vridhi Finserv Home Finance’s $37 million round by Norwest Venture Partners and Elevation Capital in September.

Private equity firm Multiples Alternate Asset Management, which has also backed Vastu, invested in Shubham Housing Finance’s $47 million round alongside other investors this month. “Over the last 12-18 months, tech-first investors have also realized the attractiveness of conventional lending segments, especially affordable housing finance, and have ventured into this space. The fast-growing nature of this market, under-penetration, profit pools and ability to tap the initial public offering markets have made it even more enticing," said Apoorve Goyal, managing director of India Investments at Prosus.