PNB Housing Finance Limited today filed its draft prospectus with capital market regulator SEBI to seek regulatory approvals for its upcoming IPO. According to the Draft Red Herring Prospectus (DRHP), the company plans to raise up to INR25 billion (INR2,500 crore) through the IPO. PNB Housing Finance IPO will be managed by Kotak Investment Banking, Bank of America Merrill Lynch, JM Financial, JP Morgan and Morgan Stanley.
Promoted by Punjab National Bank, PNB Housing Finance is the fifth largest housing finance company in India. The housing finance company plans to utilise the IPO proceeds to augment the company’s capital base and for general corporate purposes, as per the DRHP.
PNB Housing Finance IPO will not involve sale of share by any of the existing investors Punjab National Bank (PNB) and US private equity investor Carlyle Group. PNB and Carlyle Group own 51% and 49% respectively in PNB Housing Finance.
Carlyle bought the equity stake in the housing finance firm from New Silk Route in February 2015 in a deal valued at INR15 billion. 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.
During the year ended March 2016, PNB Housing Finance reported a profit after tax of INR3.27 billion (INR327.57 crore) on revenue from operations of INR26.99 billion (INR2699.54 crore) in the same period.
Regulatory pressures to speed PNB Housing Finance IPO
As we mentioned earlier, PNB is under regulatory pressure to raise funds amid growing NPAs (non performing assets) and this is likely to result in a quick listing for PNB Housing Finance. 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 Housing Finance 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.