LIC housing plans to generate Rs. 1000 cr through ECBs
Delhi-NCR- The state-run insurance giant which promotes its venture of LIC Housing Finance Limited is expecting to generate about Rs. 700-1,000 crore via external commercial borrowings (ECB).
Various realty developers and housing finance firms were permitted to generate about $1 billion via ECBs by the Reserve Bank of India (RBI) last month to promote the affordable housing projects.
According to higher official from LIC Housing Finance Limited, a committee consisting of higher officials was formed to work along with the apex bank concerning the ECB issue. This segment which is approved by the RBI is expected to have the committee members who will be generating about Rs. 700-1,000 crore.
Talking about the ECBs, they are preferred as the attractive options as the cost of raising loan overseas is lesser when compared to domestic borrowings. Also it has an additional avenue which helps in procuring large amount of funds from global financial markets.
When asked about the company’s generation date of the ECBs, the official stated that they are yet to decide besides they have formed a committee at company level and are in talks with the RBI.
Officials from the LIC Housing Finance Limited (LICHFL) also stated that by the end of the fiscal year, their firm will complete the institutional placement offer. On the pother hand, due to various reasons like volatility in the markets and others, the QIP (qualified institutional placement) was delayed.
The official has not mentioned the precise amount which will be generated through the QIP but are perhaps expecting to raise about Rs.1,200 crore from it.
The current holds of LIC, also a promoter of LICHFL, has 40.31 percent stake with their firm and other foreign and domestic institutional investors are holding 41.47 percent shares and 18.22 percent shares. The bankers appointed for the start are HSBC, Citigroup, Kotak Securities, Nomura and others.
The stake of the Parent LIC after the issue is expected to come down to about 36.54 percent. An interest rate of about 10.25 percent will be charged by the LICHFL on home loans. The official also stated that they will wait for the review of RBIs policy prior to the revision of interest rates.
The previous year, the firm had disbursed Rs. 20,000 crore loans and is targeting for Rs. 25,000 crore for the current year.
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Affordable housing projects, Delhi NCR, External commercial borrowings (ECB), global financial markets, housing loans in India, LIC Housing Finance Limited, LIC Housing Finance Limited (LICHFL), QIP (qualified institutional placement), realty developers in india, Reserve Bank of India (RBI)
