LIC Housing Finance Ltd plans to raise up to Rs 8,000 crore in the last quarter of the current financial year.
The housing finance arm of state life insurer Life Insurance Corporation (LIC) said it would use combination bonds and loans to raise the amount, to be used to fund business growth in the remaining part of the financial year.
“We have raised around Rs 15,000 crore this year and would be raising another Rs 6,000-Rs 8,000 crore in January-March 2012 for meeting our lending needs,” said V K Sharma, director and chief executive, LIC Housing Finance.
Besides strengthening its core business of retail home lending, the company would require funds in the last quarter to beef lending to developers for various commercial and housing projects, Sharma said.
The housing finance company has been able to maintain credit growth of 20 per cent so far this financial year.
“We have lent only Rs 600 crore this year to developers, against a target of Rs 3,000 crore. The demand for loans from developers had slowed since last year. This year, too, it has been slow, as the commercial sector is in the doldrums and retail projects are seeing a slowdown in metro cities” Sharma said, adding, “However, we would look to meet our developers’ loan target in the last quarter this year.”
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On fund raising, he said the company favoured doing so through bonds in the current interest rate environment, in which bank credit was more expensive than market borrowings.
Recently, the company had raised about Rs 200 crore through five-year bonds issued at a coupon of 9.5 per cent. The ratio between bonds and loans from banks stands at 65:35.
LIC housing Finance is also in talks with its promoter, LIC, to beef Tier-I capital and support growth in the medium term.
Sharma said, “We have been liaising with LIC to increase our Tier-I capital in the next financial year. A rights issue, qualified institutional placement and preferential allotment are the various options available to us. We would appoint an advisor at a later date.”
The loan portfolio of the company stands at Rs 56,000 crore, which it plans to increase to Rs 100,000 crore in three years.