Carlyle-backed Repco Home Finance’s IPO subscribed 1.6x

The public issue of the private equity-backed Repco Home Finance Ltd was fully subscribed on the final day with total bids for around 1.6 times the number of shares offered in the issue, across the BSE and the NSE, according to exchange data. The issue saw poor investor response during the first two days with just 2 per cent subscribed and that, too, led by retail investors.

The issue of nearly 13.4 million shares saw bids for around 22 million shares, led by institutional investors who bid three times the number of shares reserved for them. Also, retail investors fully subscribed to their portion but the issue did not see much interest from non-institutional investors comprising high networth individuals (HNIs) and corporates, who bid for just over a third of all the shares reserved for them.

The company was looking to sell a total of 15.72 million shares at a price band fixed at Rs 165-172 per equity share. Repco Home Finance is looking to raise Rs 259-270 crore at this price band.

The firm already raised Rs 40.1 crore through allocation to anchor investors, which included several mutual funds like Goldman Sachs India Fund, Reliance Banking Fund, Nomura India Investment Fund Mother Fund and Franklin India Prima Fund.

Repco Home Finance, a Chennai-based housing finance company, is backed by private equity major Carlyle Group besides Wolfensohn Capital Partners and Creador.

Repco Home’s IPO would see a dilution of around 25 per cent stake. The book running lead managers to the issue were SBI Capital Markets, IDFC Capital and JM Financial Institutional Securities.

The Carlyle Group invested a little over Rs 108 crore in Repco Home Finance between 2007 and 2009, through primary and secondary purchase of 49.7 per cent stake. The PE firm sold a little over 23 per cent stake in secondary transactions to Wolfensohn Capital Partners and Creador. It also sold 2.78 per cent stake to Antique Broking and Shardul Securities besides certain HNIs, raking in a total of approximately Rs 190 crore through these sales.

Carlyle’s average acquisition price is Rs 47 per share while Wolfensohn Capital Partners and Creador bought their stake for Rs 153-Rs 156 per share. At the IPO valuation, Carlyle’s post-issue stake of 17.7 per cent will be valued at Rs 190 crore.

Repco Home Finance will use the IPO proceeds to augment its capital base, which will increase its net worth and enable it to meet future capital adequacy requirements. The company, which has a strong focus on southern India, has a loan portfolio of over Rs 3,100 crore ($588 million) as of September 2012. This loan portfolio has grown at a compounded annual growth rate (CAGR) of 41 per cent between March 2008 and September 2012.

Repco’s profit after tax has grown at a CAGR of 45.47 per cent – from Rs 15 crore for FY08 to Rs 67.5 crore for FY12. For the six months ended September 2012, the company reported a total income of Rs 188.8 crore with a net profit of Rs 35.6 crore.

(Edited by Sanghamitra Mandal)

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