International Finance Corp. to invest in Aavas Financiers

International Finance Corp. (IFC) mentioned about its plans to invest around $40 million (approximately Rs. 257 crores) in housing finance company Aavas Financiers Ltd. IFC, the private sector lending arm of the World Bank, wishes to subscribe to the company’s non-convertible debentures (NCDs).

Aavas is a subsidiary of Jaipur-based non-banking finance company (NBFC) AU Small Finance Bank Ltd, which is backed by private equity firm Warburg Pincus. Aavas Financiers and AU Small Finance Bank were previously known
as Au Housing Finance Ltd and Au Financiers (India) Pvt Ltd respectively.

It aims to support affordable housing finance for purchase, construction and extension of house to individuals in low and medium income group in Rajasthan and neighboring states. The clientele includes dairy farmers, carpenters, garment traders and artisans, IFC said, adding that currently almost 65% of the customers are self-employed.

AU Small Finance Bank is spread across 11 cities via 300 branches and proposes to increase it to 400 by March 2018. Recently, IFC mentioned that it is investing up to $50 million in Capital First Ltd via five-year secured NCDs. Capital First focuses on MSME (micro, small and medium enterprises) and consumer financing. Loans are offered for buying homes, two wheelers and consumer durables, as well as loans against property, to entry and mid-level salaried employees of corporate entities and to self-employed individuals.