LeapFrog joins BII, ADB, Premji Invest in US$112m funding round for India’s Shubham

  • The Investment will accelerate their growth and enable a larger platform to provide affordable housing finance to emerging consumers across India
  • Shubham’s tech-enabled home loans are improving access to housing finance for Indians excluded from the formal economy

Gurgaon, India, 29 June 2022 – Shubham Housing Development Finance Company Limited (Shubham), a specialist mortgage lender that provides home loans to lower income families and emerging consumers across India, announced a total investment of c.US$112mn (₹8.63bn) in an investment round led by British International Investment (BII) the UK’s development finance institution – formerly known as CDC Group, LeapFrog Investments, Asian Development Bank (ADB) and PI Opportunities Fund – I Scheme II (Premji Invest). As part of the transaction, BII, LeapFrog, ADB, Premji Invest will infuse US$78mn (₹6.0bn) primary capital in the business and LeapFrog and Premji Invest will acquire a complete stake from Elevar Equity and a partial stake from Motilal Oswal.

Headquartered in Gurgaon, India, Shubham started their journey in 2011. Sanjay Chaturvedi and Rupa Basu, Promoters, have a vision to bridge the significant gap in availability of formal credit to the unserved and underserved segments of the society. The company is one of the fastest growing companies in the affordable housing finance segment with assets under management exceeding ₹ 24.1 billion and a presence across 9 states via 100 branches as of March 22. Along with a strong distribution network, unique capabilities to underwrite housing loans to this segment, Shubham also has a strong technologically integrated platform, and advanced portfolio monitoring and analytical capabilities.

“We are delighted to welcome BII, LeapFrog, and ADB on board as investors and would also like to thank Premji Invest, Elevar Equity, Helion and Motilal Oswal for their continued faith in Shubham. We will leverage the funds to help scale the organisation to the next level.” said Sanjay Chaturvedi, Co-Promoter and CEO of Shubham.

“Shubham is a leading provider of housing finance in India and with our customised solutions we have impacted over 61,000+ families and 140,000 individuals. We are excited to partner with such distinguished investors to lead Shubham into a new phase of growth.” said Rupa Basu, Co-Promoter and Executive Director of Shubham.

Core to Shubham’s business is the belief that access to credit should not be a barrier to buying a home – particularly for low-income consumers and those working in the informal economy. Leveraging tech-enabled solutions, such as data collection, predictive analytics and machine learning, Shubham helps applicants without formal documentation to establish their income and access loans.

“BII’s capital injection into Shubham will help increase access to home ownership for households through affordable housing finance and also support women’s economic empowerment. Customers will be able to access these financial products to make home purchases / improvements, which is expected to increase their access to basic services (e.g. water & sanitation, electricity)” said Srini Nagarajan, MD and Head of Asia at British International Investment .

“Access to quality housing is a critical step in improving sanitation, delivering access to clean water, improving privacy and dignity, and facilitating the creation of family wealth,” said Michael Fernandes, Partner at LeapFrog Investments. “LeapFrog is committed to supporting Shubham’s vision to help deliver home ownership to thousands of low-income Indian families for the first time and to enhance their processes through better customer experience and accelerated digitisation of Shubham’s offerings.”

“ADB’s equity investment in Shubham is our first in an affordable housing finance company in India. This investment will provide growth capital to support operations in the peripheries of larger cities, tier-II and tier-III cities, providing housing loans to lower-income households. This will also improve access to housing finance for women, a key focus area for Shubham and ADB.”, said Christine Engstrom, Director for ADB’s Private Sector Financial Institutions Division.

“Shubham filled a huge need gap by pioneering accessible and affordable housing finance for low-income communities in India. As a founding investor, it has been a privilege to work with Shubham in establishing a scaled-up business model that has demonstrated the creditworthiness and resilience of a customer segment, traditionally ignored by mainstream institutions. We are incredibly proud of our journey together and will continue to cheer for Shubham’s unwavering focus on driving fundamental change on the ground.” shared Sandeep Farias, Founder & Managing Partner, Elevar Equity.

Nomura Financial Advisory and Securities (India) Private Limited was the exclusive financial advisor to Shubham and its selling shareholders.

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About Shubham Housing Development Finance Company

Shubham Housing Development Finance Company aims to provide affordable housing finance to families with informal incomes and those outside the purview of formal credit structures, to drive financial inclusion for a better future. The company believes that every person in India should be able to buy their own home, and that informal incomes should not be a barrier to providing the credit they need. Established in 2011, Shubham was one of the first lenders in India to incorporate an innovative customised credit program for each customer instead of the traditional document-based underwriting. Shubham’s unique approach in credit decision making incorporates a comprehensive set of sources for income verification outside the traditional paper-based forms to assess the affordability.

About BII

British International Investment is the UK’s development finance institution and impact investor. British International Investment is a trusted investment partner to businesses in Africa, Asia and the Caribbean. It invests between £1.5 and £2bn every year to support the UK Government’s Clean Green Initiative and to create productive, sustainable and inclusive economies in our markets. 

British International Investment plays a key role in the UK Government’s wider plans to mobilise up to £8 billion a year of public and private sector investment in international projects by 2025. Over the next five years, at least 30 per cent of BII’s total new commitments by value will be in climate finance. This will make it one of the world’s largest climate investors in Africa. BII is also a founding member of the 2X Challenge which has raised US$10bn to empower women’s economic development. For more information, visit: www.bii.co.uk | watch here

About LeapFrog Investments

LeapFrog invests in exceptional businesses in Africa and Asia, partnering with their leaders to achieve leaps of growth, profitability, and social impact. Founded in 2007, LeapFrog’s portfolio companies now reach 342 million people across 35 countries with healthcare or financial services. LeapFrog has raised over US$2bn from global institutional investors, including US$500mn recently committed by Temasek to LeapFrog and its future funds. LeapFrog was ranked by Fortune as one of the top five Companies to Change the World, the first private investment firm ever listed. For more information, go to: www.leapfroginvest.com.

About ADB

The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

About Premji Invest

Premji Invest is the investment arm of Azim Premji’s endowment and philanthropic initiatives. It has been active in investing in the Indian markets for over fifteen years with a large investment corpus. The focus of the investments has been to grow medium-sized Indian companies into large companies that can compete globally. Investments of Premji Invest are across stages from venture to growth and late-stage and sectors such as consumer, technology, financials, and manufacturing. Premji Invest’s investments include brands such as Fab India, Hygienic Research, ID foods, Lenskart, Flipkart, First Cry, Global Bees, Policy Bazaar, SBI General Insurance, Shubham Housing, Aditya Birla Capital, KreditBee, Best Value Chem, SB Packaging, and Micro Plastics.

About MO Alternate Investment Advisors Private Limited

MO Alternate Investment Advisors Private Limited (MOPE) is a subsidiary of Motilal Oswal Financial Services Limited (MOFSL), a diversified financial services group with businesses in Securities, Asset Management, Housing Finance, Private Equity and Investment Banking. MOPE is managing both private equity and real estate funds and cumulatively manages around US$2bn between the two asset classes. The private equity vertical focuses on providing growth capital to mid-market companies across its preferred sectors of consumer, financial services, life sciences and niche manufacturing, typically in the range of INR 2,000 – 5,000 million. The private equity vertical has, in the last 15 years, made over 35 investments in the last 15 years and has completely exited 14 investments, having delivered a gross MOIC of 5.7x (INR) and gross IRR of 27.8% (INR), making it one of the top performing platforms in India. Many portfolio companies of MOPE have, over the years, scaled to between US$3 – 7bn companies from less than $100mn at the time of investment.

About Elevar Equity

Elevar Equity fuels the economic resilience and vibrancy of underserved customers and low income communities by investing early growth capital in entrepreneurs building at the intersection of inclusivity, affordability and massive scale. Led by an entrepreneurial emerging markets team passionate about addressing issues of access and inequity, Elevar invests in businesses that demonstrate a direct correlation between high impact and returns. So far in its 15-year journey, the Elevar Method of investing has democratised essential products and services for over 45 million households and catalysed billions of dollars of capital into 40+ companies across India and Latin America.

This press release was first published on June 29th, 2022

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