Companies
Former HDFC employees set up affordable housing finance firm Weaver Services
Summary
- The company, which was set up earlier this year, is currently in talks with private equity players to raise funds to acquire 2-3 small-sized housing finance companies (HFCs) across different geographies. A few former HDFC employees have also expressed interest to invest in the company.
Mumbai: Former officials of HDFC Ltd. have come together to set up an affordable housing finance business, a year after the country's largest mortgage lender merged with its subsidiary HDFC Bank.
Led by Satrajit Bhattacharya, former head of investments and M&A at HDFC, the new venture is called Weaver Services, which will specialise in low-cost housing finance. The company, which was set up earlier this year, is currently in talks with private equity players to raise funds to acquire 2-3 small-sized housing finance companies (HFCs) across different geographies. A few former HDFC employees have also expressed interest to invest in the company.
"HDFC was like a family. After the merger I didn't want to join anywhere and instead thought of making this entrepreneurial journey," Bhattacharya told Mint." We are currently looking at mid-sized HFCs as there is a lot of opportunity available and applying for a licence takes time," he added.
The story about the HFC first appeared in a news website Short Post.
Weaver is currently looking to hire employees. Among other industry leaders, it is looking to rope in former HDFC employees, some of whom are now with HDFC Bank, to join the firm.
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Among the hires include Siddharth Das, former co-founding CEO of Jio Financial Services, who has joined Weaver as the chief technology officer (CTO).
Affordable housing saw sharp pick-up in growth during FY23
After a subdued growth during the pandemic years 2020 to 2022, affordable housing saw a sharp pick up in growth during FY23. However, this category of housing units priced under ₹40 lakh has been seeing a decline in overall sales since the pandemic, to 19% in H1 2024 from over 38% in the same period before the pandemic in 2019.
Over the last few years, affordable housing finance companies (AHFCs) have seen increased interest from investors amid growth expectations. Some of the companies have raised capital from the market in addition to some players getting capital from marquee investors.
The sector has seen some big-ticket deals like the acquisition of Aadhar HFC by Blackstone in 2019, followed by Bain–Adani Capital deal, TPG–Poonawalla Housing Finance deal and Shriram Housing Finance-Warburg Pincus deal.
Affordable housing finance players cater to the under-served category of low-income or mid-income customers who may be salaried, working in the informal sector or self-employed running a small business. Typically the loan size is below ₹15 lakh.
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AHFCs have been growing at a faster pace compared to HFCs. During FY24, AHFCs grew by 29% year on year compared to a 13% growth for HFCs. The outstanding assets under management (AUM) of all AHFCs stood at ₹1.1 trillion as of March 2024, compared to the total AUM of ₹5.9 trillion for all housing finance companies. ICRA expects AHFCs to grow at 22-24% in FY25.
"Affordable housing finance companies have demonstrated resilience across cycles. Strong fundamentals such as pristine asset quality, secular growth, book stickiness and healthy return profiles continue to generate high investor interest. Government is further catalysing the industry by increasing the PMAY outlay...AHFCs are expected to grow at 20% CAGR in medium to long term to reach an AUM of over $50 billion by FY30. These factors, particularly the risk-return profile, have made the sector attractive for financial sponsors as well as strategics," said Anshul Agarwal, managing director and co-head, consumer, financial institutions group & business services, Avendus Capital.
Sneha Shah contributed to this article.
