Aadhar Housing Finance IPO: 10 things to know before subscribing to Rs 3,000-cr issue

Aadhar Housing Finance IPO

Aadhar Housing Finance’s initial public offer (IPO) is set to open on May 8. The public offer comprises both fresh issue and offer-for-sale (OFS) of shares. The anchor book will open for a day on May 7. Here are 10 key things to know before subscribing to the offer:

1) IPO dates

The IPO will open for subscription on May 8 and close on May 10, 2024.

2) Price band

The price band for the issue has been fixed at Rs 300-315 per share.

3) Offer details

The IPO 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. At the upper end of the price band, the valuation stands at over Rs 13,000 crore.

4) Objectives of issue

The fresh issue proceeds will be used to meet future capital requirements towards onward lending and the remaining amount will be utilised for general corporate purposes.

5) Lot size

Investors can bid for a minimum of 47 equity shares and multiples of 47 after that. Hence the minimum investment by retail investors would be Rs 14,100 (47 (Lot size) x 300 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,805.

Also Read: Blackstone-backed Aadhar Housing sets price band of Rs 300-315 a share for IPO

6) Company profile

Aadhar Housing lends to the low-income housing segment with small-ticket mortgage loans. The average ticket size of Aadhar's loans is 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. The ratio of these segments in FY23 was 58.6: 41.4.

7) Financials

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 months 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 nine 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.

8) BRLMs & promoters

The book-running lead managers of the IPO are ICICI Securities, Citigroup Global Markets India, Kotak Mahindra Capital, Nomura Financial Advisory And Securities (India) and SBI Capital Markets while  Kfin Technologies is the registrar.

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. It has been the promoter of the company since June 2019, while the rest of the shares are held by public shareholders with ICICI Bank having 1.18 percent shareholding.

9) Risks

(i) The company experienced negative net cash flows in operating activities on account of fresh disbursements of loans made to customers for FY21, FY22 and FY23 and for the nine months ended December 31, 2022, and December 31, 2023, and negative net cash flows in investing activities for FY21, FY23 and nine months ended December 31, 2022.

Also Read: Blackstone-backed Aadhar Housing Finance IPO opens on May 8, to mobilise Rs 3,000 crore

(ii) The company is required to maintain a minimum capital-to-risk weighted assets ratio (CRWAR), consisting of Tier I capital and Tier II capital of not less than 15 percent of 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. Further, we are required to ensure that total Tier-II capital, at any point in time, shall not exceed 100 percent of the Tier-I capital.

10) Listing Date

The basis of allotment will be finalised by  May 13, shares will be credited to demat accounts by May 14 and the stock will be listed on the NSE and BSE on May 15, as per the RHP.