The Recent Ratings Update clarifies the AIF exposure:
Further, investment by REs in the subordinated units of any AIF scheme with a ‘priority distribution model’ shall be subject to full deduction from the RE’s capital funds.
In this regard, ICRA notes that currently, Indiabulls Housing Finance Limited (IBHFL) has investments in such subordinated units of AIF, at a consolidated level, aggregating to about Rs. 1,000 crore. Accordingly, the company’s tier-1 capital is expected to contract by this amount.
The report is actually a good read for anyone looking to invest in the Company. The past problems and the current headwinds in Implementing the Co-lending model are also explained.
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