Bajaj Finance arm Bajaj Housing Finance files draft papers for upto Rs 7,000 crore IPO

For the nine months ended December 31, Bajaj Housing Finance had assets under management of Rs 85,929 crore

Bajaj Housing Finance, a subsidiary of parent Bajaj Finance has filed draft papers with market regulator Securities and Exchange Board of India (SEBI) to raise upto Rs 7,000 crores via an initial public offer, two persons in the know told Moneycontrol on the condition of anonymity.

"The e-filing of the draft red herring prospectus has been done with the regulator," said one the persons above.

A second person also confirmed the filing.

An immediate comment could not be elicited from Bajaj Finance.

The move comes a day after the board of Bajaj Housing Finance approved the firm's listing plans comprising a fresh issue of equity shares of up to Rs 4,000 crore and an offer for sale of equity shares subject to market conditions. Later, parent Bajaj Finance disclosed that the OFS ( offer for sale component) would be Rs 3,000 crore.

The company may also consider a pre-IPO placement, which if undertaken, will not exceed more than 20 percent of the size of the fresh issue.

The IPO of the home financier to comply with RBI's regulatory norms for "upper layer" NBFC's to list within three years of being notified, marks the return of the Bajaj Group to the public market after many years.

Moneycontrol was the first to report the firm's listing plans on March 27.

Later on April 6, Moneycontrol was also the first to report the syndicate of advisors for the mega deal, namely Kotak Mahindra Capital, Axis Capital, BofA Securities, JM Financial and SBI Capital. Later Goldman Sachs and IIFL Capital were also added to the syndicate.

Blackstone backed Aadhar Housing Finance and Westbridge backed India Shelter Finance are two recent market debuts in the segment.

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.

Bajaj Housing Finance has to list by September 2025 under the current regulatory timeline laid out by the Reserve Bank of India.

A closer look at Bajaj Housing Finance

Last month, PhillipCapital anticipated that Bajaj Housing Finance will debut on the exchanges in September 2025 with an expected listing price of Rs 550-570 per share.

The brokerage is positive on the firm due to its emphasis on salaried home loans, stable expense ratio, and minimal credit costs, resulting in robust return ratios.

The firm 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 offers finance to individuals as well as corporate entities for the purchase and renovation of homes or commercial spaces.

For the year ended March 31, 2024, Bajaj Housing Finance had assets under management of Rs 91,370 crore which grew by 32 percent. Disbursements also rose by 30.1 percent to Rs 44,656 crore, while profit after tax stood at Rs 1,731 crore.