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

26 October, 2016

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 firm General Atlantic and Singapore sovereign wealth fund GIC ahead of its initial public offering.

General Atlantic picked up shares worth $7 million while GIC subscribed to shares valued around $10 million. Kuwait Investment Authority and several mutual funds and insurance companies were among the 45 investors, PNB Housing said in a stock-exchange filing.

The anchor investors subscribed to the shares at the upper end of the price band of Rs 750-775. The public offering began on Tuesday and will close on Thursday. The issue was covered 20% at the end of the first day, stock-exchange data show. Institutional buyers led the subscription, bidding for 35% of the shares reserved for them. Retail investors’ quota was covered 17% while the portion set aside for companies and affluent individuals was subscribed only 8%.

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 below 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 issue. This is one of the 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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