PNB Housing Finance IPO receives Sebi nod

PNB Housing Finance has been given capital markets regulator SEBI’s (Securities and Exchange Board of India’s) nod to raise Rs.2,500 crore via an initial public offering (IPO). The well known housing finance firm had filed IPO papers with Sebi in July.

The markets regulator issued its final ‘observations’ on 6th October on the draft offer documents, which is essential for any company to initiate the public offer. PNB Housing Finance, promoted by Punjab National Bank, has planned to use the proceeds from the share sale mainly towards augmenting its capital base. (PNB share price is trading at Rs. 139.95).

As per the DRHP (Draft Red Herring Prospectus), the company has planned to raise up to Rs.2,500 crore via the initial share sale and a part of it would be kept for the employees. It added that they believe that the listing of their equity shares will upgrade their visibility and brand name among existing and potential customers.

For the financial year ended March 2016, PNB Housing Finance disclosed a profit after tax of Rs.327.57 crore whereas the revenue from operations amounted to Rs.2,699.54 crore in the corresponding period.

At the end of March 2016, PNB held 51 per cent stake in the company. After IPO it would continue to hold around 35-37 per cent of the issued and paid-up share capital, as per the DRHP.

Kotak Investment Banking, BofA Merrill Lynch, JM Financial, J P Morgan and Morgan Stanley are the global coordinators and book running lead managers for the suggested issue. The company aspires to grow business and loan portfolio by consolidating position in chief geographies as well as by widening into specific target markets such as the affordable housing segment.

Sanjaya Gupta, MD, PNB Housing Finance said that historically, they were north-centric and it is very well balanced today. Incrementally, their business involves 40 per cent from north, 30 per cent each from west and south. At portfolio level, they are 45 per cent north-central, but equally divided between west and south with 32 per cent each.

In 2010 when this entire re-engineering process started, 77 per cent of the book was sourced from north. As of now, it stands at 45 per cent. On demand scenario, the company is positive about the mass market, but feels that the luxury market needs to step up. PNB Housing Finance also planned to open an overseas branch, most probably in the Middle East, to tap the potential of the NRI segment. The total market size of the NRI segment comprises about 12-13 per cent of the overall housing market. Gupta further added that they will focus on the NRI market and is going to work on that. He feels that in the Middle-East, the economies are stable and opening branches there will be a wise option.

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