 "HDFC Credila")
Education loan financier HDFC Credila Financial Services is looking at a fresh capital infusion of Rs 2,700 crore after a new set of investors — global investors EQT and ChrysCapital — came on board in 2023-24 (FY24).
Besides EQT, ChrysCapital, and HDFC Bank, South Korean financial services player Shinhan Bank will chip in as an investor.
Arijit Sanyal, managing director and chief executive officer of HDFC Credila, said the board has cleared a proposal for raising fresh equity.
Shinhan Bank will infuse Rs 1,500 crore through preferential issuance. Existing shareholders EQT, ChrysCapital, and HDFC Bank will invest up to Rs 1,200 crore through a rights issue of shares.
This capital raising is expected to be completed in the first quarter of the current financial year and will be sufficient to support growth for 18-24 months, Sanyal told Business Standard in an interview.
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The fresh capital will be used to support growth and also reduce leverage for the company, which saw more than a twofold growth in assets under management (AUM) in 21 months to over Rs 25,000 crore as of end-December 2023.
In FY24, EQT and ChrysCapital had acquired a 90 per cent stake from HDFC Group. About Rs 2,003.6 crore came as investment, of which Rs 1,303.6 crore was brought in as part of the stake sale transaction in March 2024, according to CARE Ratings.
The rating agency said the increase in disbursements in 2022-23 amounting to Rs 7,992 crore and nine months of FY24 amounting to Rs 10,823 crore led to significant growth with AUM at Rs 25,237 crore as of December 31, 2023.
Its AUM was at Rs 8,838 crore as of March 31, 2022. The majority of its portfolio consists of loans to students going overseas for education.
A higher rate of loan growth has been witnessed after 2020-21, and only a moderate proportion of loans have been fully repaid due to the inherent nature of the long tenure of education loans. Consequently, Credila’s loan book remains moderately seasoned.
The pace of growth of loans may moderate compared to the rapid expansion of books seen between March 2022 and December 2023 if student admission trends going abroad from India come down, Sanyal said.
CARE Ratings has revised the ratings for long-term bank facilities to ‘AA’ from ‘AAA’. With the consummation of the stake sale transaction, CARE Ratings removed the company from the rating watch with ‘negative’ implications status.
