Shriram Housing plans to raise up to Rs 1,000 crore via maiden ECB issue, CFO News, ETCFO

Mumbai-headquartered non-bank Financier Shriram Housing is planning to raise up to Rs 1,000 crore in offshore loans through its first external commercial borrowing in the second half of the current financial year, a senior executive said.

“This (financial) year, we are planning to raise Rs 750-1,000 crore through ECB issuance. We will tap the markets in the later part of the year when things are expected to be better on the growth front. We thought about it for the first time. The plan is to diversify the lenders’ base,” Shriram Housing CFO GS Agarwal told ETCFO.

At present, banks constitute about 70 per cent of the lender’s borrowing, while Non-Convertible Debentures or NCDs, and financing from National Housing Bank (NHB) form 15 per cent each.

The CFO said that a “strong balance sheet” helped the lender think about tapping money through offshore loans this year. Shriram Housing’s capital adequacy ratio stands at plus 30 per cent after May’s Rs 200 crore infusion from its parent Shriram City Union Finance. Also, the housing financier has among the lowest net bad loan ratio at 1.47 per cent as of March 31 end, its CFO said.

The price of the offshore loans including hedging costs is likely to be 25-50 bps higher than the domestic market loans, the CFO said. Currently, the cost of borrowing in domestic markets is about 8 per cent for Shriram Housing Finance, he shared.

The home loan financier doesn’t see disbursements of more than Rs 100 crore during the quarter on account of pandemic disruptions. However, the company‘s full-year disbursement target of Rs 3,000 crore is intact.

In the last couple of years, offshore loans have gained traction among non-bank lenders. Earlier the instrument was only permitted to infrastructure companies.

Shriram Housing is planning to disburse Rs 3,000 crore through 2021-22, targeting a growth of about 50 per cent over the last year number of Rs 2,195 crore. The financier had grown 95 per cent on disbursements in 2020-21.

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