Home First Finance IPO fully subscribed on Day 1: 10 things to know2 min read . Updated: 21 Jan 2021, 05:13 PM IST
- Home First Finance has fixed a price band of ₹517-518 a share for its initial share sale
The IPO of mortgage financier Home First Finance opened today and the issue was 1.03 times subscribed on Day 1. The company has fixed a price band of ₹517-518 a share for its initial share-sale. The issue concludes on January 25. Ahead of the IPO, the mortgage financier on Wednesday raised ₹346 crore from anchor investors at ₹518 per share, the upper end of the price band. The anchor investors include Nomura, Fidelity International, Morgan Stanley India Investment Fund and Goldman Sachs.
Here are 10 things to know about Home First Finance IPO:
1) The offer for sale consists of shares worth ₹435.61 crore by promoter True North Fund V LLP, ₹291.28 crore by promoter Aether (Mauritius) Ltd, ₹120.46 crore by investor Bessemer India Capital Holdings II Ltd and up to ₹41.3 crore by two individual shareholders -- PS Jayakumar and Manoj Viswanathan.
2) Post issue, the shareholding of promoters in Home First Finance will come down to 33.70% from 52.85%.
3) The ₹1,153 crore IPO of Home First Finance comprises fresh issue of up to ₹265 crore and an offer for sale aggregating up to ₹888 crore by the promoters and existing shareholders.
4) The company intends to utilise the net proceeds towards augmenting its capital base to meet its future requirements.
5) Axis Capital, Credit Suisse Securities (India) Pvt Ltd, ICICI Securities and Kotak Mahindra Capital Company will manage the share sale.
6) KFIn Technologies Pvt. Ltd is the registrar of the IPO.
7) The share allocation in Home First Finance is likely to be finalised on January 29 while listing is likely on February 3
8) "Aided by its high growth momentum on a smaller base, superior underwriting standards, and efficient collections management (GNPAs at <1% and modest credit costs), Home First Financ delivered healthy RoA of 2.7% in FY20. RoE of 11% looks modest owing to lower leverage at 4x in FY20. The issue is priced at post-money P/BV of 3.4x compared to its nearest competitor Aavas Financiers which trades at 6.8x on September BV," Yes Securities said in a note.
9) "At higher price band ( ₹518), the stock valued at 4.1 (x) 2QFY21 P/ BVPS. Factoring the superlative return ratios, ROA/ROE of 11%/3%, we believe that Home First Finance Company is worth subscribing. Thus we recommend subscribe," LKP Securities said in a note.
10) Home First Finance is a technology-driven affordable housing finance company, backed by marque private equity players like True North, Warburg Pincus, Aether Mauritius and Bessemer India. "It registered loan and disbursements CAGR of 56.7% and 56.2% respectively over FY17-20. Along with strong growth, the company managed to tweak its loan mix - housing loans’ share came off from 96.7% in FY17 to 92% in FY20 and share of LAP improved from 2.1% to 5.1%. Lending spread also improved significantly from 3.3% in FY17 to 4.5% in FY20," Yes Securities said. As of September 2020, the company had an assets under management of ₹3730 crore.
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