India Shelter Finance set to launch IPO in December; looks to raise ₹1,800 cr

Gurugram-based housing finance company India Shelter Finance Corporation, which is backed by marquee investors WestBridge Crossover Fund and Nexus Ventures, is planning to launch its initial public offering (IPO) in December, according to Rupinder Singh, managing director and CEO of the company.

As per DRHP filed with the SEBI, India Shelter Finance is eyeing to raise around ₹1,800 crore through the IPO route, which would be a mixture of fresh equities and an offer for sale (OFS) by existing shareholders.

In an interaction with Fortune India, Rupinder Singh said that the company targets first-time home loan borrowers in Tier 2 and Tier 3 cities. “From the beginning, the focus was to take care of self-employed people instead of the salaried population in the low and middle-income segments with an aim to promote financial inclusion.”

In line with its financial inclusion vision, the company aims to empower women by ensuring that a majority of its loans have women as the first applicants, he says. “The company seeks to help address problems arising from patriarchy in Indian society and inculcate a feeling of security and independence in women.”

As of March 31, 2023, 97.5% of India Shelter's loans had one or more borrowers as women. Out of this, more than 50% of women own properties in their name or joint parties.

The upcoming public issue of India Shelter Finance comprises a fresh issue of equity shares worth ₹1,000 crore and OFS of up to ₹800 crore by existing shareholders. Under OFS, Catalyst Trusteeship Ltd, Madison India Opportunities IV, MIO Starrock, Nexus Ventures III Ltd, and Nexus Opportunity Fund II Ltd will offload their stake in the housing finance company.

The firm's promoters - WestBridge Crossover Fund and Aravali Investments Holdings – hold shareholdings of 24% and 31.4%, respectively, while founder Anil Mehta owns a 1.7% stake in the company. Among others, Nexus Ventures III, Nexus Opportunity Fund II, Madison India Opportunities IV, MIO Starrock, and Catalyst Trusteeship also own stakes in the company.

India Shelter Finance Corporation, which provides home loans and loans against property to customers in the low and middle-income segments, intends to use the capital raised from the issue of fresh equities to meet future capital requirements towards onward lending. A part of the fund will be also used to meet general corporate purposes.

ICICI Securities Limited, Citigroup Global Markets India Private Limited, Kotak Mahindra Capital Company Limited, Ambit Private Limited are the book running lead managers to the issue.

Between the financial year 2021 and 2023, the firm witnessed a two-year CAGR growth of 40.8% in terms of assets under management (AUM), as per CRISIL report. This growth was achieved with better risk management, resulting in the best asset quality among affordable housing finance companies in India with a gross NPA of 1.13% as of March 31, 2023.

The company has a network of 183 branches spread across 15 states with a significant presence in the states of Rajasthan, Maharashtra, Madhya Pradesh, Karnataka, and Gujarat. As of March 31, 2023, India Shelter Finance obtained long-term funding from a diversified lender base comprising over 35 counterparties, including 24 scheduled commercial banks. The company has a credit rating of ICRA A+ (stable) from ICRA Limited and CARE A+ (stable) from CARE Limited, as of March 31, 2023.