Blackstone, the world’s largest alternative asset manager and the largest owner of commercial real estate in India, has filed a draft red herring prospectus with market regulator Sebi for a mega initial public offering (IPO) by its portfolio company Aadhar Housing Finance to raise Rs 7,300 crores, people familiar with the matter told Moneycontrol.
On November 3, 2020, Moneycontrol was the first to report the listing plans of the affordable housing finance player, the country’s largest in terms of assets under management as of March 31st, 2020.
“The IPO will be a combination of fresh and secondary issue of shares," said one of the individuals cited above.
“Public markers are in a very good phase right now. Affordable housing finance collections are holding up quite well in the listed space and in this segment, the spread is wider,” a second individual told Moneycontrol.
The listing of Aadhar Housing Finance would be the first IPO of an Indian portfolio company backed by the US private equity giant in the past five years. ICICI Securities, Nomura, Citi and SBI Capital Markets are the investment bankers advising Blackstone on the offering. Law firms Cyril Amarchand Mangaldas and Khaitan and Co are the legal advisors.
“The net proceeds of the IPO will be utilized for increasing the firm’s capital base, which will be utilized towards the company’s business and growth including towards onwards lending, payment of operating expenditure, purchase of assets and repayment of outstanding loans and interest thereon as part of it’s business activities, “ said to a third person familiar with the offer documents filed with Sebi.
All three individuals spoke to Moneycontrol on the condition of anonymity. Moneycontrol could not immediately connect with Blackstone, ICICI Securities, Nomura, Citi, SBI Capital Markets, Cyril Amarchand Mangaldas and Khaitan and Co for a comment.
In October 2015, fragrance maker SH Kelkar backed by Blackstone launched a Rs 500-crore IPO. The US based private equity major is also considering a 2021 IPO by its auto component firm Sona Comstar.
Peer Home First Finance, backed by private equity players True North, Warburg Pincus and Bessemer Venture Partners, launched its IPO last week to raise around Rs 1,150 crores. Prior to Home First Finance, the last IPO in the domestic housing finance segment happened more than two years back when Jaipur-based Aavas Financiers launched a Rs 1,640-crore issue on October 25, 2018.
Know more about Aadhar Housing Finance
Aadhar Housing (formerly, DHFL Vysya Housing Finance (DHFL Vysya)) was set up in 1990, by the erstwhile Vysya Bank (as Vysya Housing Finance), with equity support from other banks and institutions, to provide rural housing loan finance. It is an entirely retail-focused affordable housing finance company, serving economically weaker and low-to-middle income customers, who require small ticket mortgage loans. As of September 30, 2020, 64.83% and 35.17% of its Gross AUM comprised loans to salaried customers and to self-employed customers, respectively. The firm offers a range of mortgage-related loan products, including loans for residential property purchase and construction; home improvement and extension loans; and loans for commercial property construction and acquisition.
In June 2019, Blackstone purchased a majority stake in Aadhar Housing Finance from Diwan Housing Finance and the Wadhawan group for around Rs 2,200 crore. It holds around 98.7 percent stake in the firm. Aadhar Housing is one of the largest affordable housing finance companies focusing on the lower and middle-income segment. It managed assets of Rs 11,432 crore as on March 31, 2020.
In fiscal 2020, its net profit was Rs 189 crore on total income (net of interest expenses) of Rs 595 crore, against Rs 162 crore and Rs 509 crore, respectively, in the previous fiscal. Aaadhar Housing Finance has a wide network of 292 branches and as of September 30, 2020, spread across 20 states and union territories, operating in approximately 12,000 locations across India, as of September 30, 2020.
The firm targets customers across geographies, in urban, semi-urban and rural areas and as a result of it’s geographical spread, the top five states in terms of contribution to AUM collectively accounted for 62% of it’s AUM as of March 31, 2020. As of September 30, 2020, the firm had a total of 2,088 employees and its 100% owned subsidiary had a total of 1,326 employees.
Based on a report on Aadhar Housing Finance dated June 30th, 2020 by rating agency Crisil, of the total portfolio, loans to salaried segment constituted around 66 percent, of which the formal sector employed accounted for 84 percent (43 percent in government jobs and remaining in private jobs) and 16 percent were from the informal sector.
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