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Nearly four years after changing its strategy to focus more on retail loans and opt for an asset-light model, Indiabulls Housing, country’s third largest mortgager, is undergoing yet another massive restructuring. This time around, it may come out of the process with a new name and identity as well.
As per the ongoing restructuring proposal, the lender’s retail and wholesale books may be split into separate entities. “We have sought permission from the Reserve Bank of India to voluntarily reorganise ourselves to have dedicated vehicles for mortgage-backed retail and wholesale lending. Both the vehicles will run the co-lending model. We will keep only 20-30 per cent of the assets we originate on our books and have a very granular liability profile,” said Gagan Banga, Vice-Chairman, MD & CEO of Indiabulls Housing Finance.
However, sources in the know say the exercise may possibly be an effort to retain the housing finance company tag as per the National Housing Board guidelines; currently enforced by the RBI.
NBFC tag
Indiabulls Housing Finance’s net assets stood at ₹55,831 crore, with 56 per cent of loans classified as retail and the rest attributable to wholesale loans. At these levels, it is learnt that the threshold required as per the NHB guidelines to operate as an HFC runs the risk of being breached; that is, the tag of housing finance company may likely be severed.
In order to ensure that it remains an HFC, post the restructuring, the retail assets would be carved out into a separate NBFC. This entity may hold the license to operate as housing financier. “The wholesale business will be done out of a combination of NBFC and alternative investment fund (AIF),” Banga said.
September target
What’s more, when the exercise is completed — tentatively by the first half of FY24, the mortgager may get a new identity. “This plan entails a change of name and corporate identity of the company to reflect the institutional character of the company,” said Banga, while spelling out that the plan may be finalised by September 30.
“This reorganisation has been approved by the Board and we have provided the required advanced information to all stakeholders. As and when the specifics are finalised, we will propose the same to RBI, and post RBI approval, seek shareholder and other regulatory approvals.”
Post the restructuring, with an efficient capital structure in place, the company is targeting at mid-teen return on equity by FY26. Indiabulls Housing closed FY23 at 7 per cent ROE.
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