COLOMBO, SRI LANKA, October 6, 1999 — The
International Finance Corporation will become an equity partner, together
with Housing Development Finance Corporation of India (HDFC) and the National
Development Bank of Sri Lanka (NDB), in the first market-based private
housing finance institution focused exclusively on housing finance in Sri
Lanka. The recently established NDB Housing Finance Company (NDB Housing)
will provide long-term mortgage loans and other new mortgage products in
HDFC, which pioneered housing finance in India and is the market leader,
will provide technical assistance. HDFC's investment of 15 percent in the
equity of NDB Housing reflects its support for the development of formal
housing finance in the region.
There is substantial unmet demand for housing finance in Sri Lanka, with
total annual demand estimated at about Rs.27 billion (US$380 million),
of which about 25 percent is serviced by financial institutions. The proposed
project will address the housing finance needs of the middle class. By
aligning with a strong technical partner, NDB Housing will introduce best
industry practices and provide a model for others to emulate. The housing
construction industry is expected to respond by building smaller, more
affordable units. Housing is an employment-intensive sector and this project
will create many jobs.
Housing and the infrastructure required to support adequate living conditions
are among the urgent problems facing Asian cities today, said Mr. Assaad
Jabre, Vice President for Portfolio Management & Advisory Operations
who signed for IFC. This investment will help to address the pressing need
for housing in Sri Lanka.
Mr. Deepak Satwalekar, Managing Director, signed on behalf of HDFC, and
Mr. Ranjit Fernando, General Manager and Director, for NDB.
IFC will make an equity investment of about $1.3 million for 15 percent
of NDB Housing's share capital. IFC, which has been investing in Sri Lanka
since the early 1970s, opened an office in Colombo in October 1998 to focus
on growing investment opportunities in Sri Lanka in areas such as infrastructure,
health and financial markets.
The mission of IFC, part of the World Bank Group, is to promote private
sector investment in developing countries, which will reduce poverty and
improve people's lives. IFC finances private sector investments in the
developing world, mobilizes capital in the international financial markets,
and provides technical assistance and advice to governments and businesses.