Hudco files draft papers with Sebi for IPO

Mumbai: State-owned Housing and Urban Development Corp. Ltd (Hudco) has filed draft red herring prospectus (DRHP) for its proposed initial public offering (IPO), according to the document available on Nomura Financial’s website.

Through the public issue, the government will sell upto 200.2 million equity shares, constituting to 10% stake in the company via offer for sale. Hudco is under administrative control of the Union urban development ministry.

Retail investors and company staff may be offered up to 5% discount to issue price.

Nomura Financial Advisory and Securities (India) Pvt Ltd, IDBI Capital Markets & Securities Ltd and SBI Capital Markets Ltd are acting as the lead managers for issue.

Hudco was set up in 1970 under the administrative control of the ministry of housing and urban poverty alleviation with the objective of providing long-term finance for the construction of houses. It also finances and undertakes housing and urban development projects in the country.

Total revenue of the company for the six months ended period ended on September 30 was reported at ₹ ,748 crore and a net profit of ₹ 347 crore.

As of 30 September 2016, the net worth of our company was Rs8,724 crore, as per its Restated Financial Statements.

The IPO is part of the government’s broader divestment plans. The Central government has set a disinvestment target of Rs56,500 crore for 2016-17. Of this, Rs36,000 crore is expected to come from minority stake sales and Rs.20,500 crore from strategic stake sales.

The government divested a part of stake in NHPC Ltd that fetched it Rs2,700 crore.

It plans to sell stakes in an additional 15 state-controlled units, including Coal India Ltd, National Fertilizers Ltd and Bharat Electronics Ltd, in the year to next 31 March 2017.

During 2015-16, the government managed to generate Rs25,312 crore through stake sales in state-run companies, less than half the target of Rs69,500 crore.

The housing finance market has a large number of players operating, with the number of HFCs alone aggregating to 79 as at 30 November 2016. The number of new entrants has also been increasing steadily.

Most of the new entrants in the two years prior to 30 November 2016 have focused on the relatively under-penetrated low-ticket home loan segment (affordable housing) and the self-employed segment, as part of a report by ICRA.