PNB Housing Finance IPO crosses half-way mark on day 2


  • 26 Oct 2016
Credit: Shah Junaid/VCCircle

Mortgage lender PNB Housing Finance Ltd saw initial public offering (IPO) covered around 58% at the end of second day of the issue led by institutional investors, stock exchange data show.

Institutional investors bid for around 92% of the shares reserved for them while retail investors’ portion was covered around 57%.

High-net-worth individuals and corporate investors bid for around 14% of their portion. However, these set of investors usually come in droves on the last day of IPOs.

PNB Housing IPO was covered 20% on the first day.

The firm had earlier 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.

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 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 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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