Chennai, Aug 10 (IANS) Shriram Housing Finance Ltd., a financial services outfit of the city-based Shriram Group scheduled to start operations soon, is open for equity participation from investors including private equity funds, said an official Wednesday.

"We received the registration certificate from the National Housing Bank last week. The housing finance company will start its operations soon," Subhasri Sriram, executive director at Shriram City Union Finance Ltd., told reporters here.

She said Shriram Housing was a wholly-owned subsidiary of Shriram City Union Finance.

"We will start the housing finance business with an initial capital of around Rs.15 crore. We plan to invest around Rs.100 crore in the equity in a couple of years," she said.

"We are not talking to any other party to be an equity partner in the housing company now. However, we will be interested if such a proposal comes as it would reduce our cost of funds, the benefit of which could be passed on in the form of lower interest rate to our borrowers," Sriram added.

She said the group was open for investments from private equity funds and others in the housing finance company.

She said the housing finance company would initially set up branches in states like Tamil Nadu, Andhra Pradesh and Maharashtra and later expand its network.

Shriram City Union is hitting the market with a non-convertible debenture issue to raise upto Rs.750 crore to expand its business.

According to her, the issue proceeds would be used to increase the company's lending to small enterprise segment currently accounting for around 24 percent of the company's assets under management of around Rs.8,000 crore.

"We will also use the issue proceeds to repay some of our loans in the course of the business. The funds will not be used to prepay any of our loans," Sriram said.