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Carlyle-backed Repco Home Finance’s IPO subscribed just 2% on Day 2

14 March, 2013

The public issue of the private equity-backed Repco Home Finance Ltd has seen weak response from investors, with the issue being subscribed only 2 per cent on the penultimate day of the IPO. The issue of nearly 13.4 million shares has seen bids for only 0.29 million shares as of Day 2, across the BSE and the NSE, exchange data revealed. Two-thirds of the bids were made at the cut-off price.

The company is 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 has 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.

The public portion of the issue has mostly seen participation from retail investors. While there had been no bids from institutional investors, non-institutional investors comprising high networth individuals (HNIs) and corporates put in some token bids on Day 2.

Many IPOs see an increase in demand during the last day and Repco issue is open till Friday, March 15.

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 will see a dilution of around 25 per cent stake. The book running lead managers to the issue are 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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Carlyle-backed Repco Home Finance’s IPO subscribed just 2% on Day 2

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