Truhome Finance Raises $100M

Truhome Finance Secures $100 Million to Fuel Affordable Housing Expansion

Financials

18 days agoPWG Publications

Truhome Finance Secures $100 Million in Historic Funding Round

In a significant development for India's affordable housing sector, Truhome Finance, a leading mortgage lender owned by Warburg Pincus, has successfully raised $100 million through its first syndicated External Commercial Borrowing (ECB). This milestone funding round was supported by DBS Bank and Sumitomo Mitsui Banking Corporation (SMBC), serving as mandate lead arrangers and joint social loan coordinators. The social loan facility is designed to enhance Truhome's lending capacity in semi-urban areas and bolster its commitment to financial inclusion and sustainable housing finance.

Background on Truhome Finance

Truhome Finance, formerly known as Shriram Housing Finance, underwent a transformative change when it was acquired by Warburg Pincus for Rs 4,630 crore in December last year. Following the acquisition, Warburg Pincus further invested Rs 1,200 crore in the company, signaling its confidence in Truhome's business model. The company boasts an impressive network of 165 branches across 17 states and union territories, focusing on borrowers from middle-income and low-income groups, predominantly in urban and semi-urban regions. The average loan book ticket size stands at Rs 18 lakh, notably higher than peers in the affordable housing finance space[1].

Key Highlights of the Funding

Financial Commitment: The financing of $100 million (approximately Rs 870 crore) is the first external borrowing by Truhome since its acquisition. It underscores the trust global investors have in the company's mission and model[1][2].
Social Loan Facility: Structured as a social loan, this initiative emphasizes Truhome's dedication to financial inclusion and sustainable housing finance. Funds will be utilized to expand lending to underserved markets, enhancing home ownership opportunities in semi-urban areas[2][3].
Partnership Details: DBS Bank and SMBC have each contributed $50 million to the loan syndication. The tenure of the loan is three years, with a blended cost of 7.9%, benchmarked against the Secured Overnight Financing Rate (SOFR)[1].
Impact on Affordable Housing: This funding will significantly amplify Truhome's capacity to cater to semi-urban and affordable housing segments. It aims to bridge the gap in home ownership for underserved borrowers, aligning with national goals of promoting broad economic inclusion and housing availability[3][5].

The Role of Social Loans in Financial Inclusion

Social loans are designed to support projects with positive social outcomes. In the context of Truhome Finance, this means focusing on affordable housing that benefits low and middle-income families. Such investments not only contribute to financial inclusion but also help in achieving sustainable development goals by providing access to essential services like housing.

Market Implications and Future Prospects

The successful raising of $100 million through a social loan facility sets a new benchmark for global funding in India's affordable housing finance sector. It demonstrates the confidence of international investors in the Indian financial markets, particularly in the housing finance segment. This transaction also highlights Truhome Finance's strong credit profile and prudent risk management practices, positioning it as a leader in the affordable housing space[3].

Conclusion

Truhome Finance's $100 million funding round marks a significant milestone in its journey to expand affordable housing opportunities across India. This move not only underscores its commitment to financial inclusion but also serves as a testament to its robust business model and strategic partnerships with global financial institutions like DBS Bank and SMBC. As India continues to prioritize affordable housing, such investments will play a crucial role in shaping the future of the housing finance sector.

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