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    Home » IIFL Finance Eyes IPOs for Home Finance and Samasta in 18 Months to Minimize Risk
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    IIFL Finance Eyes IPOs for Home Finance and Samasta in 18 Months to Minimize Risk

    Invest PolicyBy Invest PolicySeptember 23, 2024No Comments2 Mins Read
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    IIFL Finance Eyes IPOs for Home Finance and Samasta in 18 Months to Minimize Risk
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    IIFL Finance is preparing to list two of its key subsidiaries—IIFL Home Finance and Samasta—within the next 18 months. Nirmal Jain, the co-founder and managing director of IIFL Finance, revealed the company’s plans in an exclusive interview. These potential listings are aimed at minimizing business risks after regulatory challenges faced earlier this year.

    Regulatory Setbacks Prompt IPO Move

    The idea of listing the housing finance and microfinance arms emerged after IIFL faced significant setbacks. In March 2024, the Reserve Bank of India (RBI) imposed a ban on IIFL’s gold loan business, which led to a sharp decline in its gold loan portfolio, dropping from Rs 23,000 crore to Rs 12,162 crore by August. This restriction also impacted IIFL’s ability to secure bank credit for its other financial segments, including housing and microfinance.

    The ban was eventually lifted on September 20, but the six-month-long restriction forced the company to rethink its business structure. “We need to de-risk our operations,” said Jain, highlighting the need for clear and efficient organizational strategies.

    IPOs to Help Reduce Business Risks

    Jain discussed two possible strategies for managing the company’s risks: one is creating an interconnected structure where different businesses maintain a close-knit control; the other involves simplifying the structure, which could mean losing some control but reducing risk overall.

    The experience of IIFL’s gold loan segment during the RBI restrictions has pushed the company to explore the potential of listing its housing finance and microfinance units separately. Jain pointed out that the company’s other businesses, like 360 One Wealth and IIFL Securities, were not affected by the regulatory ban because they were already listed as independent entities.

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    Fairfax India’s Support

    During this challenging period, Fairfax India Holdings provided IIFL Finance with financial support, offering a Rs 500 crore loan. Fairfax, which already holds a 15 percent stake in IIFL Finance, also participated in the company’s rights issue in May 2024, helping to stabilize the business amid regulatory challenges.

    The potential IPOs of IIFL Home Finance and Samasta are seen as a step toward reducing future risks and securing financial stability for the company’s expanding portfolio.

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