Aadhar Housing Finance, owned by the affiliate of Blackstone Group, will hit Dalal Street with its Rs 3,000-crore initial share sale on May 8. This would be the third public issue opening next week, after Indegene and TBO Tek.
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Price band for the issue will be announced by the company on May 2.
The IPO, which closes on May 10, is a mix of fresh issue of shares worth Rs 1,000 crore and an offer-for-sale (OFS) of Rs 2,000 crore worth of shares by promoter BCP Topco.
BCP Topco VII Pte, an affiliate of funds managed by affiliates of Blackstone Group Inc, currently holds a 98.72 percent stake in the housing finance company. In fact, it has been the promoter of the company since June 2019.
The remaining shares are held by public shareholders including ICICI Bank with 1.18 percent shareholding.
The company has reduced its total issue size from Rs 5,000 crore earlier (at the time of filing DRHP), to Rs 3,000 crore now. As per the DRHP filed in January 2024, the IPO had comprised of a fresh issue of Rs 1,000 crore and an OFS of Rs 4,000 crore by BCP Topco.
Aadhar Housing has reserved 50 percent of the net public issue size for qualified institutional buyers (QIB), 15 percent for non-institutional investors, and the remainder 35 percent for retail investors.
The anchor book of the Aadhar Housing Finance IPO, the part of QIB, will be opened for a day on May 7.
Further, the offer included a reservation of Rs 7 crore worth of shares for the company’s employees. The issue less than the employees’ reserved portion is the net public issue.
Utilisation of IPO Money
Aadhar Housing Finance which focused on the low-income housing segment with small-ticket mortgage loans will utilise Rs 750 crore out of the net fresh issue proceeds for its future capital requirements towards onward lending, and the remaining funds for general corporate purposes.
The housing finance company is required to maintain a minimum capital adequacy ratio, consisting of Tier I capital and Tier II capital of not less than 15 percent of its aggregate risk-weighted assets and risk-adjusted value of off-balance sheet items with Tier-I capital not below 10 percent at any point of time.
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As of December 2023, its CRWAR (capital risk-weighted adjusted ratio) was 39.7 percent (of which Tier–I capital was 38.9 percent), which was lower compared to 44.9 percent as of December 2022.
About Business and Financials
The average ticket size of its loans was Rs 10 lakh with an average loan-to-value of 58.3 percent as of December 2023. The salaried people segment contributed 57.2 percent to its AUM and the remaining 42.8 percent contribution came from the self-employed segment in 9MFY24, while the ratio of these segments in FY23 was 58.6 percent: 41.4 percent.
Its gross assets under management (AUM) at Rs 19,865.2 crore at the end of December FY24 increased by 20 percent over the same period, while the AUM was Rs 17,222.8 crore at the end of the year March FY23, growing 16.5 percent over the previous year.
The Bengaluru-based retail-focussed housing finance company with 487 branches in 20 states in India has recorded healthy financial performance in the past as net profit grew by 22.5 percent on-year to Rs 544.8 crore for the year ended March FY23. Net interest income for the year increased by 28.6 percent to Rs 1,244.3 crore compared to the previous year, with net interest margin (NIM) expansion of 110 bps at 8 percent during the same period.
Net profit for the nine-month period ended December FY24 (9MFY24) jumped 35.6 percent to Rs 547.9 crore compared to the same period previous fiscal. Net interest income rose nearly 30 percent during the same period to Rs 1,170.4 crore, with NIM expanding 100 bps at 9 percent.
Disbursements during 9MFY24 at Rs 4,904 crore grew by 24.3 percent over 9MFY23 and the same in FY23 was increased by 48 percent to Rs 5,902.6 crore compared to FY22.
Aadhar Housing Finance, which compares itself with listed peers like Aavas Financiers, Aptus Value Housing Finance, Home First Finance Company, and India Shelter Finance Corporation, also reported better asset quality performance, as its gross NPA (non-performing assets) to AUM improved to 1.4 percent in 9MFY24 from 1.8 percent in the same period previous fiscal, and net NPA to AUM also fell by 30 bps to 1 percent during the same period.
Meanwhile, the company will finalise the basis of the allotment of IPO shares by May 13, and complete the transfer of equity shares to the demat accounts of eligible investors by May 14.
Investors can start trading in its equity shares on the BSE and NSE, effective May 15.
ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital Company, Nomura Financial Advisory and Securities (India), and SBI Capital Markets are the book-running lead managers to the issue.
