Shareholders approved a capital raise plan at the company’s annual general meeting on July 24. The board is now working through the details, though Jain declined to give a timeline or specify the size of the raise.
Fitch has upgraded the company’s rating from B+ to BB- with a stable outlook, while Moody’s has assigned a Ba3 rating.
Jain said the improved ratings should eventually lower the company’s cost of borrowing by 40 to 75 basis points — that’s 0.40 to 0.75 percentage points off its funding costs — depending on how global markets, including US interest rates, move from here.
For the full year, IIFL Finance is guiding for overall AUM growth of 20-25%, with gold loans likely to grow faster depending on gold prices and demand. That is a step down from the 38% AUM growth the company posted last year.
Jain pointed to the correction in gold prices and said global uncertainty, including tensions in West Asia, could add some volatility to gold prices going forward, which in turn affects loan growth. Even so, he said the company expects the broader lending environment to stay supportive.
On competition from other gold loan lenders undercutting on price, Jain played it down, betting instead on service and technology to retain customers.
He added, “Our customer franchise will remain very sticky, and we will continue to serve those customer segments where we have always being focused, especially on the retail loans which we always encourage.”
IIFL Finance‘s housing finance arm has an AUM of ₹43,000 crore, built mostly around affordable home loans and loans against property (LAP) for small businesses, with an average ticket size of ₹15.5-16 lakh.
Jain said the company is open to “all options” for the housing business, including a possible separate listing or fresh capital infusion at the holding company level, though he said no firm decision has been made and the board is still evaluating the options.
For full interview, watch accompanying video
