Vastu Housing Finance, which secured multiple funding rounds last year, aims to strengthen its presence in current markets and explore new segments before preparing for a public listing, according to co-founder Sandeep Menon. He emphasized that going public is a part of their strategy to build a long-term institutional franchise, although he did not provide a specific timeline for the IPO. The company has received support from prominent institutional investors and senior bankers, including major domestic funds. Vastu was initially backed by Multiples PE, led by Renuka Ramnath, along with notable investors such as Pramod Bhasin, Vikram Gandhi, and Samir Bhatia. Other key shareholders include IFC, Prosus (Naspers), Norwest Venture Partners, TA Associates, Faering Capital, 360 One Asset Management, and Creation Investments. Menon stated that Vastu aims to enhance productivity and operating leverage by investing in its talent, improving technology capabilities, and building a sustainable, customer-focused franchise that can thrive through various market cycles.
Experts suggest that the next phase of growth for the housing finance sector is likely to emerge from areas beyond major metropolitan cities. Menon noted that significant opportunities exist in the 40 to 200-300 cities where the urban-rural divide is diminishing, particularly in the self-employed segment for individual housing, self-construction, and resale. He highlighted that new government initiatives have expanded their target market. Key government efforts that have gained traction include the digitization of land records, improved ease of doing business, and increased investments in the sector, which Menon views as positive indicators for executing their strategy.
Despite the rising aspirations among rural populations, access to credit remains a challenge. According to ICRA’s senior vice president and sector head of financial sector ratings, the affordable housing finance segment has experienced substantial growth, but borrowers still face significant hurdles.