Vastu Housing Finance: Vastu Housing Finance to raise up to $300 million

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Mumbai: Multiples Alternate Asset Management-backed affordable housing company Vastu Housing Finance expects to raise $250-300 million (₹2,050 crore-2,460 crore) through a combination of primary and secondary share sales before the end of this financial year, said its chief executive Sandeep Menon.

He said at least $75 million (₹615 crore) will be ploughed back into the company as fresh capital with new investors which will help the company sustain its growth.

“The new investors will be global funds and sovereign wealth funds. Raising capital will give us enough headroom for growth over the next couple of years. We are in no hurry for an IPO (initial public offering) and will only move when we have a materially large size of ₹8,000-10,000 crore assets under management,” said Menon.

The company has assets of about ₹5,000 crore under management, primarily consisting of mortgages to the self-employed segment with an average ticket size of ₹13 lakh. Earlier this year it started a micro-housing business and is also building a commercial vehicle loan book through a subsidiary.

Menon said the fresh capital will also help build these two businesses.

The majority of the fundraising will be through the secondary sale as existing investors will sell part of their stake to new investors.

The $1.8 billion Multiples Alternate Asset Management has been an early backer and is the largest shareholder with a 65% stake. It started investing in Vastu Housing Finance in 2016-17 and has so far put in $100 million in the company. CEO Renuka Ramnath said the company will reduce some of its stake as it looks to give some returns to investors.

“We still think there is going to be a huge value creation in Vastu for the next 20 to 30 years but the nature of our business is that we need to give some returns to our investors. We will continue to remain the largest shareholder but will reduce the stake to 45% to 55%,” said Ramnath.

Creation Investments Capital Management holds a 10% stake in Vastu Housing Finance, Norwest Partners 10% and IIFL asset management 5%, while the rest is divided between the employees and founding investors Pramod Bhasin and Vikram Gandhi.

Vastu CEO Menon said the low mortgage-to-GDP ratio in India, a large population of self-employed and a large database of alternative information including credit bureaus and goods and services tax has created a large opportunity for analytics-based digital lending in India. He said the company can easily continue to grow at 50% CAGR and that with a 75% capital adequacy it is comfortably placed.

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