Birla Housing Finance secures Rs 96 cr IFC loan

Birla Housing Finance Ltd (BHFL) has raised Rs 96 crore from the International Finance Corporation (IFC) and securitised its portfolio with National Housing Board (NHB) for Rs 40 crore.

This, BHFL functionaries said, will help the company compete in the marketplace with low-interest housing loans.

BHW Holding AG of Germany had recently acquired a controlling stake in BHFL after buying out its joint venture partner, K K Birla group flagship Chambal Fertilizers and Chemicals. The German company is known to hav paid over Rs 100 crore to acquire Chambal's 50 per cent stake in BHFL.

The IFC loan which is spread over a ten year term at a very beneficial interest rate is completely unsecured. It has been given against the corporate backing of BHW Holding AG, giving BHFL the option of accessing more funds against the assets, the functionaries added.

IFC is the private sector lending arm of the World Bank.

Ralph Haerke, managing director of BHFL, said the loan was an important step towards sourcing much more broadbased and competitive funding. This will substantially improve the position of the company in the market place.

BHFL was seen as losing out to more aggressive players in the housing finance market, which were offering very competitive rates. But with the IFC loan and NHB deal under its belt, the company hopes to offer its products at better prices.

BHW sees huge potential for growth in the home finance market which is expected to clock a long term and sustained annual growth of 20-30 per cent per year.

By acquiring BHFL, BHW wants to enhance its growth speed and capture a greater market share.

BHW plans to bring in international home finance expertise to India and eyes partnership with Indian banks and financial institutions to drive further growth.

The company, which already has offices in the north, east and south of India, is also opening a branch in Mumbai to tighten its grip on the Indian market.