In one of the largest equity investments in the affordable housing finance segment in India by a financial investor, the sovereign wealth fund Abu Dhabi Investment Authority (ADIA) will buy a 20 percent stake in IIFL Home Finance for Rs 2,200 crore.

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IIFL Home Finance has entered into a definitive agreement for raising Rs 2,200 crore of primary capital for a 20 percent stake from a wholly-owned subsidiary of ADIA.

The deal completion is subject to regulatory approvals, it said in a statement on Friday. On completion, the deal will be one of the largest equity investments in the affordable housing finance segment, by an external investor.

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IIFL Home Finance proposes to use the additional capital to continue its granular expansion strategy into new markets to address the significant and growing demand for housing loans, a statement said.

Established in 2006 as a wholly-owned subsidiary of IIFL Finance, IIFL Home Finance has created assets under management of Rs 23,617 crore as of March 31, 2022, with an active customer base of 168,000 across 16 states and 2 union territories with over 200 branches backed by over 3,200 employees.

The company offers small-ticket housing loans, loans against property and construction finance. It also actively supports the construction of green affordable buildings in the country in collaboration with housing developers and other experts through its proprietary ‘Kutumb’ platform in an effort to limit the carbon footprint and provide cost-efficient structures.

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Speaking on the occasion, Nirmal Jain, founder of IIFL Group said, "We are delighted to partner with ADIA who bring to the table long-term commitment and rich experience of supporting growing businesses.

The investment recognises IIFL Home Finance’s position as one of India’s largest providers of affordable housing loans and how well it is placed to continue to target the large, resilient housing finance market."

"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," said Hamad Shahwan Aldhaheri, executive director of the private equities department at ADIA.

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Speaking on the occasion, Monu Ratra, CEO of IIFL Home Finance said, "IIFL Home Finance has built a strong foundation and is at an inflection point as it leverages new strategies such as co-lending, foraying into more granular products and expanding reach across Tier II and Tier III regions. We welcome our new partners and look forward to working with them in the next phase."

Established in 1976, ADIA is a globally-diversified investment institution of the government of Abu Dhabi. Avendus Capital and IIFL Securities were financial advisors to IIFL Home Finance for the deal.