Mumbai: Homegrown private equity firm True North is looking to partly exit its investment in mortgage financier Home First Finance Co. Ltd (HFFC), through an initial public offering (IPO), according to a draft prospectus filed by the company.
The proposed IPO will see the company and its shareholders sell shares worth around ₹1,500 crore. Of this, the company aims to raise ₹400 crore through fresh issuance of shares to meet its capital requirements.
“Our company proposes to utilise the net proceeds towards augmenting its capital base to meet our future capital requirements, arising out of the growth of our business and assets," the draft prospectus said.
Existing shareholders, led by True North, are looking to sell their shares worth around ₹1,100 crore. True North plans to sell shares worth ₹830.6 crore, the draft prospectus shows. True North holds 71.34% stake in the company, which it had acquired in 2017.
The proposed initial share sale of the company comes at a time when non-bank lenders, especially mortgage financiers, have seen tough times due to a credit crunch that has hit the sector following defaults by Infrastructure Leasing & Financial Services (IL&FS) group. The credit crunch has seen several other lenders default on their debt repayments such as and Dewan Housing Finance Corp Ltd and Altico Capital Ltd.
HFFC is a technology driven affordable housing finance company that targets first time home buyers in low and middle-income groups. It offers customers housing loans for the purchase or construction of homes, which comprised 91.5% of its loan book, as of 30 September, 2019.
The lender’s loan book has grown at a CAGR of 69.8% between the financial year 2017 and the financial year 2019, increasing from ₹847.3 crore as of 31 March 2017 to ₹3,113.3 crore as of 30 September.
Salaried customers accounted for 72.6% of its loan book, while self employed customers accounted for the rest.
HFFC also offers loans against property, developer finance loans and loans for purchase of commercial property, which comprised 4.7%, 2.8% and 1.1% of its loan book respectively.
The lender has a network of 65 branches covering over 60 districts in 11 states and one union territory, with a significant presence in urbanized regions in Gujarat, Maharashtra, Karnataka and Tamil Nadu.