Repco Home Finance Ltd, a housing finance company backed by the private equity major The Carlyle Group, has filed its draft red herring prospectus (DRHP) with market regulator SEBI for a primary issue where the company is looking to dilute over 25 per cent stake.
The firm raised Rs 75.93 crore from the Carlyle Group in 2007 through equity shares and CCPS. The private equity major, which invested through its growth fund, also acquired shares from the promoters for Rs 32.2 crore in two tranches in 2008 and 2009. It currently holds 49.7 per cent stake in the company. Carlyle Growth’s India head Shankar Narayanan and director Mahesh Parasuraman also hold a small stake in the company while its promoter Repco Bank has 50.02 per cent stake.
Although the company has not indicated how much it is looking to raise through the issue, media reports suggest that it may scoop Rs 200 crore, which would mean a post-issue valuation of Rs 800 crore and a notional return of nearly 4x for Carlyle, according to VCCircle estimates.
The issue proceeds will be used to augment the capital base of the company, thus increasing its net worth and helping meet future capital adequacy requirements.
Interestingly, Carlyle also holds 5.24 per cent stake in Housing Development Finance Corporation (HDFC), India’s largest housing finance company. The stake had been picked up for $650 million or Rs 2,638 crore in 2007.
Set up in 2000, Repco Home Finance provides individual home loans and loans against property. The company has 56 branches and 20 satellite centres located in Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, Maharashtra, Orissa and Pondicherry. Majority of these facilities are in the peripheries of tier I cities, as well as tier II and tier III towns.
The company is promoted by the Repatriates Co-operative Finance and Development Bank Ltd, majority-owned by the government of India with minority stakes held by some repatriates, besides various state governments of south India, where the firm has its operations. It was set up to help and promote the rehabilitation of repatriates from Sri Lanka, Myanmar, Vietnam and other countries.
Repco’s outstanding loan portfolio grew by a CAGR of 47.18 per cent from Rs 441.8 crore in March 2007 to Rs 2,073 crore in March 2011. Its profit after tax has increased in the same period at a CAGR of 49.79 per cent from Rs 11.5 crore to Rs 58.1 crore. The company had a gross NPA of 1.21 per cent and a net NPA of 0.88 per cent as of March 2011. While 44.94 per cent of its loan portfolio includes salaried borrowers, the remaining is non-salaried (self-employed) borrowers.
The BRLMs to the issue are SBI Capital Markets Ltd, IDFC Capital Ltd and JM Financial Consultants Pvt Ltd.
Carlyle Hoping For Better Luck This Time
Last year, another Carlyle-backed firm Claris Lifesciences went public. Carlyle, through its First Carlyle Ventures III, had invested $20 million (Rs 90 crore) in Claris Lifesciences in March 2006 via preferential shares that represented 13.89 per cent stake pre-IPO. Its average cost of purchase stands at around Rs 127 per share. Carlyle holds around 11.1 per cent in the firm as of June 30.
Claris Lifesciences’ scrip is currently trading at Rs 120 a share, implying that the investment value has gone underwater in what is a mature portfolio firm, having clocked over five years.