Shubham Housing raises Rs. 305 crore from PremjiInvest, Helion, Elevar

Originally appeared in LiveMint on January 24, 2018

Shubham Housing Development Finance Co., which provides housing loans to families with informal incomes, has raised Rs.305 crore in a series D round of funding, a senior company executive said.

The funding round was led by PremjiInvest, the family investment arm of Wipro chairman and billionaire Azim Premji, and also saw participation from existing investors Helion Venture Partners and Elevar Equity. This round also saw the exit of Accion’s Frontier Investment Group and Saama Capital.

“The investors have infused Rs.235 crore directly into Shubham, while PremjiInvest has further given Rs.70 crore to offer an exit to Accion Frontier and Saama Capital,” said Sanjay Chaturvedi, chief executive of Shubham Housing.

Helion Advisors and Elevar Equity infused Rs10 crore each into the company, while the rest Rs.215 crore came from PremjiInvest, he said.

In September, Mint reported that PremjiInvest was in advanced talks to invest Rs.225 crore in the company.

As part of this deal, Rahul Garg, partner at PremjiInvest, will join the Shubham Housing board.

“We fully support the promoters in their endeavour to provide affordable housing solutions for the marginalized sections of society. This is also aligned with the government’s stated objective of ‘Housing for All’,” said Garg.

Founded by Sanjay Chaturvedi and Ajay Oak, Shubham Housing had raised $1 million each from Helion Advisors and Elevar Equity in 2010. It further raised $2 million each in a series B round from Accion’s Frontier Investment Group, Saama Capital, Helion Advisors and Elevar Equity in 2012. In 2014, Shubham Housing raised $20 million (Rs.120 crore) in a series C round led by Motilal Oswal Private Equity Advisors Pvt. Ltd.

Investment bank Avendus Capital advised Shubham Housing on the deal.

Shubham Housing wants to expand its loan book to Rs.6,000 crore by 2021, from the current Rs.1,000 crore, Chaturvedi said.

In the first nine months of the current fiscal year, the company clocked revenue of Rs.125 crore and expects to close the year with revenue of Rs.175 crore, he said. In fiscal 2017, Shubham’s revenue was Rs150 crore.

While the company’s profitability suffered last year due to demonetization, which resulted in higher delinquencies and regulatory norms requiring higher provisions, Chaturvedi expects the company’s profitability to jump significantly from next year.

“In the long-run, demonetization will be useful because as people move from informal to formal income, it becomes easier for companies to assess their creditworthiness,” he said.

The affordable housing space has witnessed a spurt after the government proposed a raft of incentives. The incentives include infrastructure status for affordable housing, interest subvention for housing loans and increase in allocation for the governnment’s Pradhan Mantri Awas Yojana housing scheme from Rs.15,000 crore to Rs.23,000 crore.

“Last budget was almost the budget of affordable housing. I believe our segment is sitting on a place where there are very favourable tailwinds,” said Chaturvedi.