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Carlyle-backed PNB Housing Finance’s IPO covered 29 times

27 October, 2016

The initial share sale of PNB Housing Finance Ltd was covered 29 times at the end of issue on Thursday, as the mortgage lender joined a host of local companies that have received strong response from investors for their public offerings this year.

Subscription was led by high-net-worth individuals and corporate investors, who bid for around 86 times the portion reserved for them. Institutional investors bid for around 37 times the shares reserved for them while retail investors’ portion was covered 1.3 times, stock-exchange data show.

The IPO was subscribed 20% on the first day and crossed the half-way mark on the second day.

PNB Housing joins another lender, RBL Bank Ltd, in attracting investors in droves during first-time share sales. RBL Bank’s IPO was covered almost 70 times

Earlier this year, business services provider Quess Corp and enzyme maker Advanced Enzyme Technologies Ltd broke multi-year records. Quess Corp’s IPO was covered 144 times while that of Advanced Enzyme got bids for 116 times the shares on sale, making these the biggest and the second-biggest offerings by subscription in eight years. Also this year, diagnostics firm Thyrocare Technologies Ltd’s share sale was covered 73 times and TeamLease Services Ltd’s IPO was subscribed 66 times.

The strong response to these IPOs comes after market volatility in the first half of this year had forced several firms to skip their planned share sales. However, a rebound in the secondary markets over the past couple of months has offered hope to companies looking to float IPOs. Many of these companies are also backed by private equity firms, which are looking at some liquidity activity to show returns to their investors.

Ahead of the IPO, PNB Housing had raised Rs 894.2 crore ($134 million) by selling shares to a bunch of anchor investors. Private equity firm General Atlantic picked up shares worth $7 million while and Singapore sovereign wealth fund GIC subscribed to shares valued around $10 million. Kuwait Investment Authority and several mutual funds and insurance companies were among the 45 investors.

The anchor investors subscribed to the shares at the upper end of the price band of Rs 750-775. 

The mortgage lender aims to raise Rs 3,000 crore ($450 million) through the IPO, as per its red herring prospectus filed with the Securities and Exchange Board of India. This is higher than the Rs 2,500 crore it had planned to raise in the draft red herring prospectus filed in July.

The lender received regulatory approval for the IPO earlier this month. It is seeking a valuation of as much as Rs 12,850 crore ($1.9 billion) through the share sale.

PNB Housing is a unit of Punjab National Bank, which holds a 51% stake in the company. After the IPO, the state-run bank will hold about 38-39% of the mortgage lender, according to the red herring prospectus.

Private equity firm Carlyle Group owns the remaining 49% stake in PNB Housing; its stake will drop to around 37% after the IPO. 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 IPO is entirely a fresh sale of shares. The lender plans to use the proceeds from the share sale mainly to augment its capital base and 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. 

Kotak Investment Banking, BofA Merrill Lynch, JM Financial, JPMorgan and Morgan Stanley are bankers for the issue. This is one of a few IPOs where a majority of managers are international banks (click here for a look at which investment banks are raking it in from the surge of IPOs in India).

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General Atlantic, GIC among anchor investors in Carlyle-backed PNB Housing IPO

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Mortgage lender PNB Housing Finance Ltd has raised Rs 894.2 crore ($134 million) by selling shares to a bunch of anchor investors including private equity...
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Carlyle-backed PNB Housing Finance’s IPO covered 29 times

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