Aadhar Housing Finance sets price band at ₹300-315 for its ₹3,000 cr IPO

Blackstone Group-backed Aadhar Housing Finance on Thursday fixed the price band at ₹300-315 per share for its upcoming initial public offering (IPO), slated to open on May 8. The three-day IPO will close on May 10, while the shares of the Mumbai-headquartered housing financial company are expected to list on the BSE and NSE on May 15.

Aadhar Housing Finance looks to raise ₹3,000 crore via IPO route, comprising a fresh issue of 3.17 crore shares worth ₹1,000 crore and an offer for sale (OFS) of 6.35 crore shares amounting to ₹2,000 crore by promoter BCP Topco VII Pte Ltd, an affiliate of the U.S.-based investment group, Blackstone. At the upper end of the price band, the company is valued at around ₹13,000 crore.

Currently, BCP Topco holds a majority stake of 98.72% in the company, while ICICI Bank owns 1.18% shares. In 2019, BCP Topco, the private equity funds managed by Blackstone had acquired the entire stake in Aadhar Housing Finance from the existing controlling shareholders, Wadhawan Global Capital Limited (WGC) and Dewan Housing Finance Limited.

Amit Dixit, Head of Private Equity Asia, Blackstone, says, “The listing is a significant milestone for Aadhar Housing Finance and its transformation is a great example of what we do best - building businesses that build India. We brought our scale, network, and best global practices to grow the business, and empowered the company in digitising its processes, end to end from origination to collection.”

Mukesh Mehta, Senior Managing Director in Blackstone Private Equity, said, “It is rewarding to be a part of Aadhar Housing Finance Limited’s mission to enable underserved Indians to own homes and play a role in the company’s transformation and growth. Our priority has been to build through close alignment with the Company’s leadership and using Blackstone’s access to capital, resources, and our technology expertise.”

The mortgage lender aims to use funds raised from fresh equities to meet future capital requirements for onward lending and general corporate purposes.

The lot size for the IPO is 47 equity shares and in multiples thereafter, which means the minimum application amount for retail investors will be ₹14,805 for 1 lot.

As per the Red Herring Prospectus (RHP) filed with the SEBI, the company has reserved half of the issue for qualified institutional buyers (QIBs), up to 15% for non institutional investors (NIIs), and the remaining 35% for retail investors.

Established in 2010, Aadhar Housing Finance is one of the largest housing finance companies in India, servicing the home financing needs of the low-income segment. It has business interests across 20 states and union territories and has asset under management (AUM) of around ₹18,000 crore and an average loan ticket size of less than ₹10 lakh.

For the nine months ended December 31, 2023, profit after tax (PAT) stood at ₹547.88 crore, while revenue was at ₹1,895.17 crore. For FY23, the company reported 18.22% year-on-year rise in revenue at ₹2,043.52 core, while PAT rose 22.22% YoY to ₹545.34 crore.

According to CRISIL, Aadhar had the highest AUM and net worth among its analysed peers in FY21, FY22, FY23 and nine months ended December 31, 2023. As of December 31, 2023, the company had a network of 487 branches, including 109 sales offices spread across the country.

As per CRISIL report mentioned in the RHP, the overall size of the housing finance market focusing on low income housing loans in India was around ₹ 4.4 lakh crore as of December 2023, constituting for around 14% of the overall housing finance market, as per CIBIL data. CRISIL MI&A expects the industry to pick up steam gradually and the loans outstanding in housing finance focused on low income housing segment to touch ₹5.4-5.7 lakh crore by March 2026, translating into an 8-10% CAGR between fiscals 2023 and 2026.

ICICI Securities Limited, Citigroup Global Markets India Private Limited, Kotak Mahindra Capital Company Limited, Nomura Financial Advisory and Securities (India) Private Limited and SBI Capital Markets Limited are the Book Running Lead Managers to the offer.