New Vision Indiabulls Housing Finance to Reduce Risk, Merge Seven Subsidiaries & Expand Co-Lending in a Fresh Way

Indiabulls Housing Finance to Expand in a Fresh Way

New Direction

Indiabulls Housing Finance is preparing for a new life with a new identity business strategy and restricted ambition, after the departure of founder-chairman Sameer Gehlaut after a turbulent period.

Higher Accountability

Gagan Banga, the company's chief executive officer, stated that the company will prioritise higher accountability standards, greater credibility, and better governance structures, such as expanding its investor base and restructuring its corporate structure to merge its seven subsidiaries into the housing finance company.

CEO Gagan Banga emphasises investor base expansion and the consolidation of seven companies into the home finance company.

Perception is Vital

Mr. Banga said that the new business model is a recognition that the firm would experience liquidity issues anytime the risk perception rises. He noted that even six months after IL&FS failed on its loan obligations, the company believed it was invulnerable since it had obtained a AAA credit rating. Yet they understood that they had little influence over the pro-cyclicality of the debt markets. In the financial services industry, perception is crucial, and by virtue of their being an NBFC and an enterprising NBFC, they were very exposed.

Now that the firm has institutional investors and a fee-based business model, it expects to limit these risks.

Indiabulls Commercial Credit

In May of 2023, the firm will introduce a new brand and name as part of the modifications. It also intends to integrate its seven companies into the home finance firm in order to maintain a singular emphasis on mortgages, for which it will seek court permission in the first part of the next fiscal year. Now, the home finance parent has an additional NBFC subsidiary named Indiabulls Commercial Credit as well as other entities that provide insurance advice services.

Regulatory Arbitrage

Banga said that a single firm would make it capital-efficient and eliminate the perception of regulatory arbitrage. According to him, the firm also intends to generate USD 250 million in the first half of the next fiscal year, which would be utilised to acquire previously identified mortgage assets.

Shareholders

The biggest shareholder is still Gehlaut with a 9.58 percent interest, followed by LIC with 8.79 percent and a nominated director on the board. Blackstone and Abu Dhabi Investment Authority are among the other owners.

Co-lending Path

The corporation decided in 2021 to cease expanding its balance sheet and instead generate money by originating loans for banks and other financial institutions. Under this co-lending approach, Indiabulls creates and executes retail house loans in accordance with mutually set credit standards and eligibility requirements, transferring 80% to its partner and retaining 20%.

Conclusion - A New Approach