India’s IIFL Home Finance has signed a definitive agreement with a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA) to divest a 20% stake.
The deal will see the Abu Dhabi sovereign wealth fund’s arm make an equity investment of INR22bn ($281.9m) for the 20% stake.
IIFL Home Finance will use the proceeds to enter new markets to accelerate its business growth.
IIFL Home Finance is the wholly-owned subsidiary of IIFL Finance, with assets under management of INR236bn, 200 branches and 3,200 employees.
The firm was established in 2006 and currently serves an active customer base of 1,68,000 across 16 states and two Union Territories.
It offers small-ticket housing loans, loans against property and construction finance.
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The investment, which is subject to regulatory approval, is anticipated to be one of the largest in the housing finance segment by an external investor.
Currently, India’s affordable housing finance market is over $150bn and is projected to grow substantially over the next decade.
ADIA executive director of the private equities department Hamad Shahwan Aldhaheri said: “IIFL Home Finance has already established itself as one of India’s leading technology-enabled mortgage lenders.
“This investment aims to support the company for its next phase of growth, as it meets the significant demand in India’s large, under-served and fast-growing affordable housing finance market.”