PNB Housing Finance to launch IPO in October

Once launched, PNB Housing Finance’s IPO will be 2016’s second largest after ICICI Prudential Life Insurance’s Rs6,000 crore initial share sale


The exact timeline for PNB Housing Finance’s IPO launch in October will be decided after the road shows are wrapped up.
The exact timeline for PNB Housing Finance’s IPO launch in October will be decided after the road shows are wrapped up.

Mumbai: PNB Housing Finance Ltd, the housing finance unit of state-run Punjab National Bank (PNB), plans to launch its Rs2,500 crore initial public offering (IPO) in October, said two people aware of the development. Once launched, it will be 2016’s second largest IPO after ICICI Prudential Life Insurance Ltd’s Rs6,000 crore initial share sale.

“The firm has been conducting investor road shows for the last few weeks and expects to wrap them up in a week’s time. It has received good feedback from investors and plans to launch the offer in the month of October,” said one of the two people cited above, requesting anonymity, as he is not authorized to speak to the media.

The exact timeline for the IPO’s launch in October will be decided after the road shows are wrapped up, this person added. “The fact that a public sector enterprise is being run as a private sector enterprise, generating good returns, is a big attraction for investors.”

Emails sent to the company on Tuesday went unanswered.

Mint reported on 20 October 2015 that PNB Housing Finance was planning to raise Rs2,500 crore through a share sale. In July, the company filed its draft red herring prospectus (DRHP) with Securities and Exchange Board of India.

The firm has hired Kotak Mahindra Capital Co. Ltd, DSP Merrill Lynch Ltd, JM Financial Institutional Securities Ltd, JP Morgan India Pvt. Ltd and Morgan Stanley India Co. Pvt. Ltd to manage the IPO.

PNB holds a 51% stake in its housing finance arm, which was founded in 1988 as a non-banking financial company. Private sector financial services firm Destimoney Enterprises Pvt. Ltd held the remaining 49% that it acquired in 2009.

In February 2015, private equity firm Carlyle Group acquired Destimoney’s 49% stake in PNB Housing.

Post-IPO, PNB would “continue to hold approximately 35-37% of the issued and paid-up share capital”, according to the DRHP.

The housing finance company plans to utilize the proceeds to augment its capital base and for general corporate purposes, its prospectus said.

PNB Housing Finance plans to grow the business and loan portfolio by consolidating its position in key geographies as well as by expanding into specific target markets such as the affordable housing segment.

In 2015-16, PNB Housing Finance disbursed loans worth Rs14,456 crore, as against a disbursement of Rs9,440 crore in the previous year. As of 31 March 2016, the lender’s loan book stood at Rs27,177 crore.

In 2015-16, the company’s gross non-performing assets stood at 0.22%.

In 2015-16, it reported Rs2,699.54 crore revenue, a jump of 51% over Rs1,780.38 crore in the previous fiscal. During the year, it reported a net profit of Rs327.56 crore, compared with Rs194.07 crore in the previous year.

So far in 2016, 17 companies have tapped the capital market through their IPOs. They have together raised about Rs11,936.5 crore, as per data from Prime Database, a primary market tracker.

Last year, 21 firms hit the capital market to raise almost Rs13,614 crore through the IPO route, the best in five years, data from Prime Database showed.

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