A day after UAE sovereign wealth investor Abu Dhabi Investment Authority (ADIA) acquired 20% stake in its mortgage financing arm, IIFL Group Chairman Nirmal Jain said private investments in India amid rising interest rates and global economic changes Investment is set to grow.
“I think there will be a structural change in private investment and investors will look more favorably in India. The primary reason is that Chinese policies and disclosures are far more opaque than in India. Most Indian entrepreneurs and businesses are relevant to foreign investors. “Jain said in an interview.
Jain projects that support the government to create new manufacturing capacities, lower corporate tax rates on new companies and the Production Linked Incentive (PLI) scheme will enable large investments.
“What China saw in the last 15-20 years, what India will see in the next 20 years. This will offset the (ongoing) global impact in the long run. In the short term, we need to see the impact of rising interest rates and higher crude oil prices.”
A first generation entrepreneur, Jain founded IIFL in 1995 with equity research firm India Infoline, which has now expanded as the IIFL Group and is one of the largest domestic financial services firms.
Established in 2006 as a wholly owned subsidiary of IIFL Finance, IIFL Home Finance had assets under management 23,617 crore till March 31.
ADIA on Thursday evening announced a deal to take up 20% stake in IIFL Home Finance Ltd. 2,200 crore, one of the largest private equity investments in the affordable housing finance segment in India.
ADIA’s investment has come in the form of long-term growth capital for the housing finance platform to grow at a compound annual growth rate of 15-20% and Jain believes that it will be a foray into the sub-sector for IIFL Home Finance. will increase the chances of doing so. 10 lakh home loan segment. “The focus is increasingly on affordable housing. We expand this business by sub- 10 lakh segments in very small towns. While the cost of borrowing has increased (the Reserve Bank of India has increased the repo rate by 100 bps this year), we do not see any further growth if the economy does well,” Jain said.
However, if interest rates rise further, home loan demand may slow slightly and it may take 12-18 months for the inflation and interest rate cycle to ease.
Apart from affordable housing, Jain is optimistic about the long-term prospects of the financial services sector in India, which includes microfinance and co-lending.
IIFL Group is also backed by marquee investors such as Canadian billionaire Prem Vatsa’s Fairfax Holdings, private equity firm General Atlantic and UK development finance firm British International Investment (formerly CDC Group). Jain and his family hold around 25% stake as part of promoter shareholding.
The Mumbai-based group offers wealth management, institutional equity and retail broking services, consumer and housing finance, mutual fund distribution and – latest – a dedicated fund for investing in startups. Jain also sees an opportunity in the ongoing improvement in valuations within the startup ecosystem. “I am happy with the improvement because valuations are more realistic now and businesses will have more diligence and a lot more dedication,” he said.