IIFL Finance, a non-banking finance company, recently disclosed securing $175 million via an external commercial borrowing (ECB) method in June. The funds were sourced from various institutions, including $75 million from HSBC, $50 million each from Union Bank (Sydney), and Bank of Baroda (IFSC unit). This capital infusion strengthens IIFL Finance’s financial position and opens avenues for further growth
IIFL Finance raises $175 million through external commercial borrowing
IIFL Finance, one of India’s leading non-banking finance companies, has successfully raised $175 million through an external commercial borrowing (ECB) route. The funds were secured from prominent financial institutions, including HSBC, Union Bank, and Bank of Baroda. This recent capital infusion follows the company’s earlier fundraising of $100 million in March through the same ECB route.
The long-term nature of these funds provides the company with a solid foundation to strengthen its asset-liability management position and support continuous growth across its core business segments. Moreover, diversifying borrowing sources helps the company lower its overall borrowing costs, ensuring efficient financial operations.
With this funding, it aims to enhance its profitability, capital, and funding capabilities. The company’s asset-light model has been driving strong momentum, leading to improved financial indicators and attracting positive attention from rating agencies. Moody’s Investors Service, in April, upgraded IIFL Finance’s long-term corporate family rating, foreign currency senior secured debt rating, and foreign and local currency senior secured medium-term note program ratings.
As of March 2024, IIFL Finance had free cash and undrawn lines worth Rs 9,356 crore, providing ample liquidity to fulfil long-term commitments. The company’s focus on maintaining a low level of non-performing assets (NPAs) has resulted in a gross NPA of 1.8% and net NPA of 1.1%, reinforcing its commitment to quality assets.
Additionally, the company has recently opened a public issue of secured bonds in June, aiming to raise Rs 1,500 crore. These bonds offer attractive yields and flexible interest payment options to investors.
The successful fundraising efforts of IIFL Finance highlight the market’s confidence in the company’s growth potential and the robustness of its financial position. The raised funds will contribute to sustaining IIFL Finance’s upward trajectory in the non-banking finance sector.
IIFL Finance’s Growth and Strong Financial Ratings
IIFL Finance, a prominent non-banking finance company in India, has witnessed significant growth and garnered positive recognition for its financial stability. The company’s core business segments, including home loans, gold loans, digital loans, and microfinance loans, have contributed to its success, serving over 85 lakh customers through a vast network of more than 4,000 branches.
As of March 31, 2024, IIFL Finance‘s loan assets under management reached Rs 64,638 crore, reflecting its robust market presence. Moody’s, one of the leading credit rating agencies, upgraded IIFL Finance’s international credit ratings in April, highlighting the company’s improved profitability, capital, and funding capabilities.
Moody’s ratings upgrade was driven by IIFL Finance’s asset-light model, which resulted in off-balance sheet loans comprising 37% of its total assets under management. This strategic approach has positively impacted the company’s funding, profitability, and capital structure, supporting its growth trajectory.
Furthermore, the company successfully oversubscribed its secured retail public bonds issue in June 2024, raising Rs 452 crore. The bonds offer competitive interest rates ranging between 8.35% and 9% for different tenors, providing investors with attractive investment opportunities.
Its commitment to maintaining a strong financial position is evident through its repayment of $400 million, including interests, from a maiden dollar bond issue in February 2020. With a focus on retail loans, the company has consistently maintained low levels of non-performing assets, with gross NPA at 1.8% and net NPA at 1.1%.
The combination of steady growth in loan assets, strong financial ratings, and successful bond issuances positions IIFL Finance as a trusted player in the non-banking finance sector. The company’s dedication to quality assets and continuous expansion is driving its success in the dynamic Indian financial landscape.
IIFL Finance’s Successful External Commercial Borrowing and Funding Sources
IIFL Finance has demonstrated its ability to secure significant funding through the external commercial borrowing (ECB) route, reinforcing its position as a reliable borrower in the financial market. In June 2024, the company raised $175 million through ECB, following an earlier funding round of $100 million in March 2024.
The recent ECB fundraising attracted major financial institutions, with HSBC contributing $75 million, while Union Bank and Bank of Baroda each invested $50 million. This diversification of funding sources strengthens IIFL Finance’s financial resilience and enables it to optimise borrowing costs.
Moreover, IIFL Finance successfully collaborated with Export Development Canada and Deutsche Bank (Singapore) for its March 2024 funding. This venture secured $50 million in long-term funding from Export Development Canada, co-financed by an additional $50 million from Deutsche Bank (Singapore), further expanding the company’s borrowing portfolio.
The availability of long-term funds empowers IIFL Finance to enhance its asset-liability management position, providing stability and support for its core business growth. The company’s Chief Financial Officer, Kapish Jain, emphasised the significance of these funds in strengthening the overall financial position of the company and fostering continuous expansion.
IIFL Finance’s strategic approach to diversifying funding sources and accessing external borrowing at competitive rates is crucial for sustained growth and minimising financial risks. By leveraging strong partnerships with renowned financial institutions, IIFL Finance ensures the availability of adequate funds to fulfil its long-term commitments and capitalise on emerging market opportunities.
IIFL Finance’s Future Outlook and Positive Market Response
IIFL Finance’s recent fundraising successes and positive market response have positioned the company for a promising future. The company’s strategic initiatives, including the raising of funds through secured retail public bonds and external commercial borrowing, reflect its commitment to sustainable growth and expansion.
The oversubscription of its secured retail public bonds issue in June 2024, along with the successful fundraising of $175 million through ECB, showcases investors’ confidence in IIFL Finance. These funds, in combination with the earlier funding of $100 million, further strengthen the company’s financial capabilities, providing a total borrowing capacity of $275 million since March 2024.
Moody’s upgrade of IIFL Finance’s credit ratings to B1 stable highlights the company’s strong momentum, driven by its asset-light model and focus on quality retail loans. The upgrade also acknowledges the company’s robust profitability, capital position, and funding capabilities.
With a stable outlook, IIFL Finance is well-positioned to leverage its market presence, diverse loan offerings, and financial stability to navigate the evolving landscape of the non-banking finance sector. By maintaining a low level of non-performing assets and focusing on retail loans, the company aims to sustain its growth trajectory and deliver value to its customers and stakeholders.
IIFL Finance’s success in securing funds, expanding its product portfolio, and maintaining strong financial ratings reinforces its status as a leading non-banking finance company in India. The company’s dedication to excellence and its commitment to driving sustainable growth positions it favourably in the competitive financial market.
