PNB Housing Finance Limited has selected three investment banks for its upcoming IPO. People with knowledge of the matter told IPO Central that the INR20.15 billion (INR2015 crore) IPO will be managed by Morgan Stanley, JP Morgan and Bank of America Merrill Lynch. While timing of PNB Housing IPO is being deliberated as of now, promoters are keen to bring the public offer within the fiscal year ending 31 March 2017. The company is yet to submit draft prospectus with capital market regulatory SEBI.
PNB Housing Finance is promoted by Punjab National Bank (PNB) and US private equity investor Carlyle Group which own 51% and 49% respectively. Carlyle bought the equity stake in the housing finance firm from New Silk Route in February 2015 in a deal valued at INR15 billion. Sources we talked to indicated that both promoters will be offloading part of their capital in the upcoming IPO. Carlyle is not a stranger in India and its past investments include Repco Home Finance and HDFC. The PE giant is also an investor in Edelweiss Financial Services and India Infoline, both of which have presence in the housing finance market.
PNB Housing Finance posted a 77% growth in profit after tax to INR1.92 billion during FY2016 while its net worth stood at INR21.45 billion.
Regulatory pressures to speed PNB Housing IPO
Parent PNB may be interested in pushing for the listing of its housing finance arm as the bank is under regulatory pressure to raise funds amid growing NPAs (non performing assets). Recently, PNB posted an extraordinarily high loss of INR53.67 billion for the quarter ended March 2016 against a net profit of INR3.06 billion in the same quarter a year ago. PNB’s Managing Director Usha Ananthasubramanian has indicated in the past that the bank is interested in selling part of its equity stake in PNB Housing Finance.
PNB Housing IPO may kickstart the process of listing of non-core assets and businesses by banks. In a similar move, Central Bank of India is planning to list its home finance subsidiary named Cent Bank Home Finance Ltd.