Grihum Housing Finance Is Eyeing Co-Lending Partnership With Banks

Grihum Housing Finance Ltd. is looking to ink a co-lending pact with banks in the wake of a change in ownership of the housing financier to global private equity firm, TPG.

"Very certainly, quite a few more avenues are on the horizon; co-lending is one of them," Manish Jaiswal, managing director and chief executive officer of Grihum Housing Finance, told NDTV Profit on the sidelines of an event on Tuesday announcing the ownership change in the erstwhile Poonawalla Housing Finance Ltd.

"We are aware that there is a possibility of the RMBS structure through a government investment platform, which is likely to come. So, the liability profile of the housing sector will see significant changes in the next 2-3 years," he said.

RMBS—or residential mortgage-backed securities—consists of pooled small mortgage home loans backed by the houses as collateral, so the default risk associated with them is commonly low. The payments on these loans flow through to the investors who buy into the RMBS. 

Poonawalla Housing Finance has been rebranded as Grihum Housing Finance after the U.S.-based TPG acquired 99.02% equity stake in the company from parent Poonawalla Fincorp Ltd. for Rs 3,900 crore earlier this year.

Prior to Poonawalla Fincorp, the housing finance company was a part of Magma Group.

"Each management change has occurred because of organisation stage and evolution. It largely was the need for the fillip capital, but the dream of the institution has remained unwavering and constant,” Jaiswal said in the event.

With the assets under management growing at 28% annually, the company is targeting an AUM of Rs 8,200 crore by FY24. By FY25, it is expected to grow further to Rs 11,000 crore and Rs 14,000-15,000 crore by FY26.

The housing financier will focus on lending to first-time home loan borrowers, specifically self-made individuals in the semi-urban and rural regions of the country, he said.

"We want to achieve 15% profitability at return on equity level, and return on assets of 3%. That target has not changed," Jaiswal said at the event.

On being asked about the capital infusion of Rs 1,000 crore by the new parent company, Jaiswal said that Rs 538 crore out of the total amount has already been raised. "We will need capital for growth of our business. Once we are able to deploy this capital, the next round of infusion could be by June next year," Jaiswal said.

Affordable housing loans account for around 74% of Grihum Housing Finance's entire portfolio, with an average ticket size of around Rs 10 lakh, Jaiswal said. However, 85% of loans are under Rs 25 lakh, he said.

Jaiswal is "confident" of maintaining the borrowing costs of Grihum Housing Finance, even after the ratings downgrade post divestment by Poonawalla Fincorp.

Currently, Grihum Housing Finance's borrowing cost stands at 8.1%. "We are at 'AA-', which is among the best ratings that housing finance companies enjoy," Jaiswal said.

"...The kind of assets we generate are PSL (priority sector lending) assets. Not only PSL assets, it is safe, it has lowest risk weights and also yields very high capital efficiency to our lenders. We are reasonably confident to mine such privileges, given the nature of our business and purpose of our existence," he said.