Bajaj Housing Finance, a unit of Bajaj Finance Ltd, has initiated preliminary talks with several investment banks about a potential initial public offering at a valuation of around $9 billion to $10 billion to comply with regulatory norms, three people familiar with the development said.
The move is in line with RBI's mandatory requirement for "upper layer" NBFCs to list within three years of being notified. These are early days, and the firm is planning to raise $900 million to a billion dollars via the proposed IPO, keeping the minimum dilution and expected valuation range in mind," according to one of the people cited above.
The first person added that no final decision had been made and that the quantum and plans may change depending on market conditions.
Bajaj Housing Finance has to list by September 2025 under the current regulatory timeline laid out by the Reserve Bank of India.
A second person cited above said that Bajaj Housing Finance had held early negotiations with a group of select domestic and foreign investment banks regarding the proposed listing.
"A syndicate of investment bankers will be chosen soon from this pool, and the deal is likely to be kicked off in the coming weeks, with the first IPO from the reputed Bajaj Group in several years," this person said.
All three spoke to Moneycontrol on the condition of anonymity.
A third person familiar with the plans of Bajaj Housing Finance said that the IPO is likely to be a combination of primary and secondary issue of shares.
Email queries sent to Bajaj Finance and Bajaj Housing Finance were left unanswered at the time of publishing this article despite multiple reminders. This article will be updated as soon as we hear from the firms.
The regulatory regime for upper layer NBFCs
On September 30, 2022, the RBI announced the list of 16 NBFCs in the Upper Layer under Scale Based Regulation for NBFCs. The framework categorised NBFCs in Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL) and Top Layer (NBFC-TL). It specified that Upper Layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank based on a set of parameters and scoring methodology.
Apart from Bajaj Housing Finance, the Upper Layer list also included Tata Sons, HDB Financial Services, Tata Capital Financial Services, Aditya Birla Finance and Shanghvi Finance.
Also read: Analysis: Tata Sons faces a delicate balancing act between pragmatism and upholding its legacy
Earlier this month, listed parent Aditya Birla Capital announced that it would merge its arm, Aditya Birla Finance, with itself.
In February 2024, Aadhar Housing Finance, backed by private equity major Blackstone, refiled its draft initial share sale documents with the markets regulator, the Securities and Exchange Board of India, as the affordable home financier aims to raise as much as Rs 5,000 crore this year.
Earlier in December, private equity firm Westbridge-backed housing finance firm India Shelter Finance launched a Rs 1,200 crore IPO and made its public market debut.
A look at Bajaj Housing Finance
Bajaj Housing Finance is a diversified NBFC catering to more than 76.5 million customers across the country, according to its website. Based in Pune, Bajaj Housing Finance Limited offers finance to individuals as well as corporate entities for the purchase and renovation of homes or commercial spaces.
It also provides loans against property for business or personal needs as well as working capital for business expansion purposes. The company also offers finance to developers engaged in the construction of residential and commercial properties, as well as lease rental discounts for developers and high-net-worth individuals.
For the nine months ended December 31, Bajaj Housing Finance had assets under management of Rs 85,929 crore, a 31 percent increase over the year earlier. Disbursements also rose by 31 percent to Rs 25,308 crore, while net profit increased by 41 percent to Rs 1,350 crore.
On March 27, the Bajaj Finance stock, which has perked up 8.16 percent in the past month, closed at Rs 7,029 on the National Stock Exchange, up 1.7 percent from the previous close. Bajaj Finance parent Bajaj Finserv ended the day at Rs 1,585, down 0.56 percent from March 26 close. For the month, too, the stock has remained flattish.
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