Bangalore: The Overseas Private Investment (Opic), a U.S. agency, which mainly helps American companies invest abroad and promotes the development of emerging markets, has decided to lend $80 million (382.4 crore) to a Chennai based finance company Repco Home Finance (RHFL) in 2009.
M Balasubramanian, Managing Director, RHFL said, "Opic has decided to give $80 million in two portions, $30 million and $50 million, which are subjected to clearance from the Reserve Bank of India (RBI). The U.S. agency has also given commitment to provide additional $50 million for our microfinance arm."
Opic had previously lent to Dabhol Power, promoted by Enron in 1996. After being in controversy for sometime, Enron went bust. This is the first investment by Opic in any finance company in India. "The purpose of the loan is to create access to affordable homes for low- and middle-income families, who have been traditionally under-served by major banks," said Opic official.
RHFL was promoted by Repco Bank which, in turn, was promoted in 1969 jointly by the Union government (41 percent), the governments of four Southern states (10 percent) and individuals (49 percent).
Repco bank was promoted to build homes and offer employment to people of Indian origin, who returned to India from Sri Lanka and Myanmar. India had signed an agreement with Srilanka and Myanmar to take back five lakh and three lakh families respectively.
"Repco provided employment to these people, allotted land to them and built 700,000 homes. Since 1984, we have been working like any other commercial bank," said Balasubramanian.
In December'07, the Carlyle group, one of the world's largest private equity firms acquired 14 percent stake in RHFL and increased it to 46 percent in April 2009, by converting preference shares into equity. RHFL did not disclose the conversion price.
Manoj Singh, a member of the U.S. India Business Council, an agency that aims to increase trade and economic partnerships between the two countries said, "The Opic loan is an indication of the growth potential of the country's housing market."
"Under the terms of the agreement with Opic, all mortgages arising from its loan will be assigned to Opic," said Balasubramanian.