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Carlyle-backed PNB Housing Finance files for $370 mn IPO

05 July, 2016

PNB Housing Finance Ltd has filed its draft red herring prospectus for an initial public offering (IPO) to raise up to Rs 2,500 crore ($370 million).

The mortgage lender is a unit of state-run Punjab National Bank, which holds a 51% stake in the company. After the IPO, the state-run bank will continue to hold about 35-37% of the mortgage lender, according to the prospectus filed with the capital markets regulator Securities and Exchange Board of India.

Private equity firm Carlyle Group owns the remaining 49% stake in PNB Housing. It had acquired the stake last year when it purchased bulk of the business of New Silk Route-controlled financial services firm Destimoney in its first major buyout in India.

The proposed IPO is entirely a fresh sale of shares, according to its prospectus. The housing finance firm plans to use the proceeds from the share sale mainly to augment its capital base.

Here’s a snapshot of the company and the issue:

Size: The IPO is entirely a fresh share issue to raise up to Rs 2,500 crore.

Bankers: Kotak Investment Banking, BofA Merrill Lynch, JM Financial, JPMorgan and Morgan Stanley.

Objects of the issue

The lender plans to use the money to augment its capital base. It also plans to use not more than 25% of the funds raised for general corporate purposes. The company plans to grow its business and loan portfolio by consolidating its market share and expanding into specific target markets such as the affordable housing segment.

Company

PNB Housing is the fifth-largest mortgage lender in India by loan portfolio as of 30 September 2015. Its parent is one of the largest state-run banks in India. The mortgage lender’s loan portfolio grew at a compound annual rate of 62% from Rs 3,970 crore as of 31 March 2012 to Rs 27,177 crore as of 31 March 2016.

It has 47 branches across the northern, western and southern regions of India. It also has 16 processing hubs and about 5,000 channel partners in its distribution network.

Financials

PNB Housing reported a profit after tax of Rs 327.57 crore for the year ended March 2016, up from Rs 194.1 crore the year before. Revenue from operations jumped to Rs 2,699.54 crore from Rs 1,780.38 crore.

Its gross bad loans, as a percentage of its total loan portfolio, were 0.20% as of 31 March 2015 and 0.22% as of 31 March 2016.

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Carlyle-backed PNB Housing Finance files for $370 mn IPO

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