Bajaj Housing Finance targets valuation of Rs 56k cr-Rs 59k cr for IPO; may trim issue size and launch in September

Bajaj Housing Finance targeting IPO valuation of Rs 56k cr-Rs 59k cr; may trim issue size and launch in September

Bajaj Finance arm Bajaj Housing Finance is targeting a valuation of between Rs 56,000 crore and Rs 59,000 crore for its initial public offering, multiple industry executives familiar with the development said.

The IPO will mark the return of the Bajaj Group to the public markets after several years. Moneycontrol was the first to report the firm's listing plans on March 27.

"The firm is looking at a post-money valuation range between Rs 56,000 crore to Rs 59,000 crore and plans to launch the IPO in the first half of September, though timelines haven't been frozen yet," one of the people cited above said, requesting anonymity.

In June, Bajaj Housing Finance filed draft papers with SEBI for a Rs 7,000 crore IPO, including new shares worth Rs 4,000 crore and a Rs 3,000 crore offer for sale by its parent. The market regulator gave its nod to the IPO earlier this month.

A second person told Moneycontrol that the size of the issue is likely to be trimmed to between Rs 6,300 crore and Rs 6,600 crore. A third person confirmed the same.

An email query to parent Bajaj Finance remained unanswered at the time of publishing this article.

At the end of day's trade on August 14, the market cap of Bajaj Finance and Bajaj Finserv was around Rs 4 lakh crore and Rs 2.46 lakh crore respectively.

Kotak Mahindra Capital, BofA Securities, Axis Capital, JM Financial Ltd, IIFL Securities, Goldman Sachs and SBI Capital Markets are the book-running lead managers. Cyril Amarchand Mangaldas is the legal advisor to the housing financier.

The upper layer clause

The move by Bajaj Housing Finance is in line with RBI's mandatory requirement for "upper layer" NBFCs to list within three years of being notified i.e September 2025.

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.

A closer look at Bajaj Housing Finance and NBFC IPOs

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, it 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. It will utilise the net proceeds from the fresh issue to augment its capital base to meet future business requirements. A portion of the proceeds from the fresh issue will be used towards meeting offer expenses.

Listing of the shares on the stock exchanges will also enhance the company's brand name and help create a public market for its equity shares in India, the firm said in its draft red herring prospectus.

In May, 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.

Blackstone-backed Aadhar Housing Finance and Westbridge-backed India Shelter Finance are two market debuts from 2024 in the NBFC segment.

In June, Mumbai-based Avanse Financial Services, which is promoted by Warburg Pincus and also backed by Kedaara Capital and IFC, filed draft papers with Sebi to raise Rs 3,500 crore via an IPO.

If the plans of Avanse fructify, it would arguably be the first-ever listing by an education-focused NBFC in India.