Indiabulls Housing working on a new identity 

After nearly four years of changing its strategy to focus more on retail loans and opting for an asset-light model, Indiapolis Housing, the country’s third-largest mortgage lender, is undergoing another massive restructuring. This time, you may exit the process with a new name and identity as well.

According to the ongoing restructuring proposal, the retail and wholesale books of the lender could be split into separate entities. “We have sought permission from the Reserve Bank of India to voluntarily reorganize ourselves to allocate vehicles for retail and wholesale mortgage-backed loans. Both vehicles will operate on a syndicated lending model. We will retain Only 20-30 per cent of the originating assets are on our books and we have a very meticulous liability profile.”

However, insiders say the exercise may be an effort to keep the HFC label in line with NHC guidelines; Currently enforced by the Reserve Bank of India.

NBFC tag

Indiabulls Housing Finance has net assets of INR 55,831 crore, with 56 per cent of the loans classified as retail loans and the remainder attributable to wholesale loans. At these levels, the threshold required by NHB guidelines to operate as an HFC is known to be at risk of being breached; That is, the HFC tag will probably be cut off.

Also read: Indiabulls Housing Finance Board of Directors Streamlining Company Structure: Gagan Banga

In order to ensure that HFC remains, after the restructuring, retail assets will be divided into a separate division NBFC. This entity may hold a license to operate as a residential financier. “Wholesale trade will be done through a combination of NBFC and Alternative Investment Fund (AIF),” Banga said.

September target

Further, when the exercise is complete — initially by the first half of FY24, the mortgage holder may obtain a new identity. “This plan entails changing the company name and corporate identity to reflect the corporate character of the company,” Banga said, while explaining that the plan may be finalized by September 30.

“This reorganization has been approved by the Board of Directors and we have provided the required advanced information to all stakeholders. When the details are finalized, we will propose the same to RBI and, following RBI’s approval, seek shareholder and other regulatory approvals.”

Post restructuring, with an efficient capital structure in place, the company is targeting mid-teens return on equity by FY26. Indiabulls Housing closed FY23 at 7 per cent return on equity.

specified schedules

By June 2023: Board approval for reorganization and name change

By July 2023: Approvals from RBI and other regulators

By August 2023: shareholder approval

By September 2023: Receipt of lenders approval

source: Indiapolis Housing