Godrej enters financial services space with the launch of Godrej Housing Finance; plans to invest up to Rs 1,500 crore

The Godrej Group has come as a financial services industry with Godrej Housing Finance (GHF). Furthermore, it is expecting to have a long-term and sustainable retail financial services business in India. They are aiming for a balance sheet of Rs 10,000 crore in the coming three years.

Besides that they have committed to infuse up to Rs 1,500 crore in the capital in the mortgage finance company over the next three years, the company said.

GHF will provide a fair, fast, and flexible home mortgage across India starting with homebuyers in Mumbai, NCR, Pune, and Bengaluru. GHF will partner with developers including Godrej Properties, to build a financing experience for their existing and buyers.

The company further said that GHF is willing to focus on the mortgage business starting with home loans, shortly by loans against property. Apart from that, the company will expand its product portfolio to provide business and personal loans, leveraging the group’s consumer and agribusiness ecosystems to build these verticals.

GHF will initiate with extending loans at 6.69 percent, the rate of interest is lowest in the industry presently. The initial target customers buying apartments from the group’s realty arm Godrej Properties (GPL).

GHF’s Chairman Pirojsha Godrej told reporters “We believe we have gained a good understanding about the real estate business and its intersection with finance and are entering the new business after a carefully thought strategy”.

He added further “We are excited to launch our financial services business today.  This is the first step in what we hope will be another important pillar of growth for the Godrej Group. The increasing formalization of the real estate sector combined with the dislocation in the residential real estate and housing finance markets makes this a particularly interesting opportunity at the current moment. We hope to deliver value to the Indian home buyer with a deep focus on fair, fast, and flexible home loans that delight our customers”.

“The initial equity for the business will be put in by the Godrej Group. This is expected to be in the range of Rs 1,000 crore to Rs 1,500 crore in the first three years. Any equity requirements beyond this we will evaluate at the subsequent stage,” he said.

“We believe that the Housing Finance market is underpenetrated and underserved. The industry is also plagued with being complex and convoluted with hidden conditions and painfully long customer journeys. We aim to correct this and usher a refreshingly simple and transparent way of doing business. We want to give customers a home loan that is customized to what’s important to them, basis their housing needs, financial capability, and convenience,” said Manish Shah, managing director, and CEO, GHF.

Shah further stated that the company was planning to achieve a portfolio of Rs 1,000 crore by end of the fiscal in March 2021, and touch Rs 10,000 crore in assets under management within three years of the launch by having 40,000 loans accounts.

The company might consider getting an external investor on board after three years and an initial public offering in 6-7 years once the need for more capital arises.