Free Press Journal

PNB Housing Finance to raise Rs 3,000 cr via IPO


Mumbai : With an initial public offering (IPO) of PNB Housing Finance Limited (PNBHFL), the 27-year old public sector housing finance company (HFC) will create a landmark for other PSUs who are in advanced talks to get listed. The IPO will help PNBHFL raise Rs 3,000 crore and the price band of it is Rs 750-775 per share. The issue will hit the market on 25 October and close on 27 October, 2016.

The company has been working on getting listed for last nine months, said PNB Housing Finance, MD, Sanjay Gupta, during the conference. “There is enough of growth potential for housing finance companies (HFCs). The penetration of HFC is growing faster in the country,” said Gupta.  With HFCs being better positioned, Gupta felt this as a right time for the company to get listed.  Through the IPO, the stakes of US-based private equity firm Carlyle Group will come down to 37 per cent and PNBHFL will be somewhere between 37 -39 per cent. Gupta stated that PNBHFL continue to hold the majority stake even after the IPO.

The company is growing at a CAGR of 20 per cent. According to the company presentation, the deposits of PNBHF are increasing and costs of funds are low.

The institution will use the raised sum for their onward business. PNBHFL, chief financial officer, Jayesh Jain said that last year PNB housing did Rs 14, 450 crore business and this year in the first half, it did Rs 5,000 crore business. The next disbursement for PNB housing will take place in two-three months.

PNBHFL has 48 branches which are backed by 18 hubs that carry out the underwriting. The financial institution plans to add 18 more branches which would be spread across three different zones – north, west and south. When quizzed if there are any branches opening in North east, Jain said, “We will be opening few branches in North east. We are planning to go to Odisha but not further east.” With a presence of 40 per cent in North and 30 per cent in the south, the HFC is eyeing to maintain a steady balance across the country.

In June 2016, the company inked a seven-year deal with Asian Development Bank (ADB) to support affordable housing. The company has already dispersed this amount across the country, stated an executive. For the company to grow, lending and borrowing needs to keep on happening and Jain believes that it is not a problem for them. But he pointed that rising of debt will be a challenge for many smaller HFCs and that is how their growth will be stagnated. The non-performing assets (NPA) of the company stood at 2.2 per cent. But Gupta hopes that it will improve in the time to come. Commenting about NPAs, Jain added, “NPAs (in the HFCs) are half of the overall financial institutions and we will continue to see this trend.”

Responding to a question of PSU, Jain said, “There are many PSUs that are unlisted and now government can consider diluting their stake and taking them private. If government needs to unlock their wealth and this is only a way.” LIC housing finance and GIC housing finance are the quasi-PSUs among the HFCs.