The 34-year-old Aadhar Housing Finance Ltd. is scheduled to launch its three-day initial public offering on Wednesday. The IPO will close on Friday.
The IPO by the housing finance company, incorporated as Vysya Bank Housing Finance Ltd. in Bengaluru in 1990, comprises fresh issue of shares worth Rs 1,000 crore and an offer for sale of Rs 2,000 crore by promoters and shareholders, according to the red herring prospectus dated April 30.
Out of the total fundraise of Rs 3,000 crore, Aadhar Housing Finance intends to use Rs 750 crore to meet future requirements towards lending and other corporate purposes.
The price band is fixed at Rs 300 to Rs 315 per equity share.
The company's promoter, BCP Topco VII Pte. is expected to sell equity shares worth Rs 2,000 crore. The book-running lead managers of the issue are ICICI Securities Ltd., Citigroup Global Markets India Pvt.,Kotak Mahindra Capital Co., Nomura Financial Advisory and Securities (India) Pvt., and SBI Capital Markets Ltd.
Investors can bid for a minimum of 47 equity shares, and in multiples of 47 thereafter. The minimum investment threshold mandated for retail investors is Rs 14,805. Further, the company offers a discount of Rs 23 per share to its employees.
The likely date for share listing is May 15, with the allocation of shares expected to be concluded by May 13. Kfin Technologies Ltd. has been appointed as official registrar of the public offer.
The company, which commenced its operations in February 2011 as Aadhar Housing Finance, had capital adequacy ratio of 39.7% as on Dec. 31, 2023. This is well above the RBI's minimum capital requirement for housing finance companies of 15%. The company's tier-I capital stood at 38.9%.
The net worth of the company was Rs 4,249 crore at the end of December quarter. Aadhar Housing Finance focusses on low-income housing segment, wherein the ticket size is less than Rs 15 lakh, and offers mortgage-related loan products in tier-4 and tier-5 towns across the country.
The company has a network of 487 branches, including 109 sales offices across 20 states and Union territories at the end of December 2023. In FY23, Aadhar Housing Finance posted a net profit of Rs 545 crore, up 22.5% from a year ago.
Also Read: Aadhar Housing Finance IPO: Check Allotment, Listing Date And How To Check Allotment Status
Key Risk Factors
The company's erstwhile promoters, Dewan Housing Finance Corp., Wadhawan Global Capital Ltd., Kapil Wadhawan, Dheeraj Wadhawan, and Aruna Wadhawan are subject to ongoing regulatory investigations by enforcement agencies. The outcome of such investigations may adversely impact the company and its share price.
Aadhar Housing Finance has had negative net cash flows in the past in operating activities on account of fresh loans to customers, and may continue to have negative cash flows in the future. For the nine months ended Dec. 31, net cash used in operating activities stood at negative Rs 1,658.2 crore.
Any increase in the levels of non-performing assets in AUM would adversely affect the company's business, results of operations, cash flows and financial condition. The gross NPA of the company, as on Dec. 31, 2023, was at 1.4%, as compared with 1.2% at the end of March 2023.
The company is vulnerable to the volatility in interest rates and may face interest rate and maturity mismatches between its assets and liabilities in the future, which may cause liquidity issues.
Aadhar Housing Finance's indebtedness, and conditions and restrictions imposed by their financing arrangements could adversely affect the ability to conduct business and operations. The housing financier's total borrowings at the end of December 2023 was at Rs 13,128 crore, up 12% from a year ago.
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