Maldives : MLD: EQUITY INVESTMENT AND LOAN TO THE HOUSING DEVELOPMENT FINANCE CORPORATION

Nonsovereign Project | 41914-014

The project consists of a loan of up to $7.5 million to, and an equity investment of up to$4.5 million in the Housing Development Finance Corporation (HDFC) located in the Maldives. HDFC is a specialized finance institution that was established to mobilize long-term financing for the provision of mortgage financing for affordable homes.

Project Details

  • Project Officer
    Gunawardhena, Manohari
    Private Sector Operations Department
    Request for information
  • Country/Economy
    Maldives
  • Modality
  • Sector
    • Finance
Project Name MLD: EQUITY INVESTMENT AND LOAN TO THE HOUSING DEVELOPMENT FINANCE CORPORATION
Project Number 41914-014
Borrower / Company HOUSING DEVELOPMENT FINANCE CORPORATION PLC
Country / Economy Maldives
Location
Type or Modality of Assistance
2418 Loan Ordinary capital resources USD 7.50 million Closed
7274 Equity Ordinary capital resources USD 4.50 million Committed
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector

Finance / Housing finance
Gender
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Gunawardhena, Manohari
Project Sponsor(s)
Description The project consists of a loan of up to $7.5 million to, and an equity investment of up to$4.5 million in the Housing Development Finance Corporation (HDFC) located in the Maldives. HDFC is a specialized finance institution that was established to mobilize long-term financing for the provision of mortgage financing for affordable homes.
Objectives and Scope The loan will enable HDFC to further expand its activities by providing access to long-term funding that is necessary for providing long-term mortgages. The equity investment will support the government's privatization plan for HDFC and will lead to a more efficient mortgage finance company.
Status of Development Objectives The privatization helped transform HDFC into a commercially viable, private sector-led company that could compete, grow, and develop effective ways to meet the mortgage financing needs of the people of the Maldives. The project contributed measurably to (i) meeting an urgent need for housing in the Maldives (ii) increasing the availability of mortgage lending and strengthening the financial sector, and (iii) generating jobs and additional revenue.
Status of Operation/Construction HDFC remains as a key player in the housing finance area in Maldives. As of December 2018, HDFC has $114 million in assets (MVR1.7 billion) compared to $23 million in 2008 (CAGR 17.9%) when ADB invested in the Company.
Linkage to Country/Regional Strategy The Project addresses some of the key concerns highlighted by the CPS (2007-2011). First, it increases private sector participation in the economy through the privatization of HDFC. Second, it will help alleviate some of the Government's fiscal burden, as the Government can no longer provide funding for HDFC. Third, the financial sector will be strengthened through the expansion of HDFC operations. Fourth, the TA will strengthen HDFC's institutional capacity. Finally, and most importantly, the Project will address the chronic shortage of housing.
Safeguard Categories
Environment FI
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects

The loan is assigned a classification of FI for environment and category C for indigenous people and resettlement. As per ADB's Environment Policy (2002), HDFC will be required to establish an environmental management system and resettlement framework, within a time frame to be specified and setting out detailed screening and assessment mechanisms. ADB will review and approve the developed environmental management system. Further, HDFC will build capacity for implementing the system in accordance with its specific business needs and with ADB assistance, and will send at least one HDFC officer to ADB-sponsored environmental management training.

With respect to the poverty analysis impact of the project, the project has been assigned a classification of GI. The Project will indirectly contribute to poverty reduction by supporting private sector growth and promoting mortgage financing in the Maldives. The social impact of the Project is high. The provision of mortgage lendilig will enable a broad spectrum of Maldivian society access to housing. Moreover, mortgage lending enables a country to generate multiple sources of employment in the construction and real estate industries
Involuntary Resettlement The loan is assigned a classification of category C for resettlement.
Indigenous Peoples The loan is assigned a classification of category C for indigenous people.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 18 Apr 2007
Credit Committee Meeting 11 Mar 2008
Approval 09 Apr 2008
PDS Creation Date 25 Oct 2007
Last PDS Update 23 Jul 2019

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Housing Development Finance Corporation Reports and Recommendations of the President Mar 2008
Housing Development Finance Corporation: Extended Annual Review Report Extended Annual Review Reports Sep 2016

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

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