Shriram Housing Finance raises $50 million in its maiden external commercial borrowing

economictimes.indiatimes.com:

Shriram Housing Finance has raised $50 million in its maiden external commercial borrowing (ECB) as the lender is looking to diversify its funding source. Funds from the ECB will be used for the financing of affordable housing. The mortgage lender, which is part of the Shriram Group, has raised the fund from Canara Bank's London branch at 200 basis points over Secured Overnight Financing Rate (SOFR), a company official said.

The fund was raised for three years. The overall cost with one-year hedging cost has come around 8.4%, the official said. This is in line with the company's average borrowing cost of 8.5%.

One basis point is 0.01 percentage point. «As one grows it is always important to have multiple avenues of fundraising open,» managing director Ravi Subramanian told ET. «We will be looking at this mode of raising funds in the future as well.

While there are no targets we have set internally, we expect to raise another $150 million this year,' he said, adding that global investors are keen to tap into the potential that the affordable housing finance sector in India presents. The lender has financed 1.36 lakh housing units so far and has a gross loan book of Rs 9,000 crore at the end of June. It is one of the fastest growing in the affordable housing space with its loan portfolio growing 44% CAGR over the last four years.

The company is in line with its target of achieving Rs 10,000 crore AUM by September and expand it further to Rs 13,000 crore by March next year. About three-fourths of its business comes from the western and southern states with average loan size being Rs 16.6 lakh. The company also borrows from banks, debt capital market, and gets refinancing from National Housing Bank.