MUMBAI:
Home First Finance Company (HFFC), a Mumbai-based private lender, plans to enter the stock market this fiscal with its ₹1,500-crore initial share sale, two people aware of the development said.
Credit Suisse, Kotak Mahindra Capital and ICICI Securities have been hired to run the sale process.
HFFC was set up in 2010 by former
Mphasis chairman Jerry Rao and PS Jayakumar, MD and CEO of Bank of Baroda. Homegrown private equity firm True North Capital owns 80 per cent of HFFC. Another 10 per cent stake is held by VC fund
Bessemer Venture Partners (BVP), and the rest is with the management.
In the proposed
initial public offering (IPO), existing investors would seek to sell a part of their holdings and also raise primary capital. HFFC is expected to be valued around ₹4,000 crore. It has assets under management (AUM) of ₹2,400 crore. A True North spokesperson declined to comment. Mails to BVP and HFFC remained unanswered.
HFFC is the third True Northbacked company to plan an IPO this year. Bengaluru-based Fincare Small Finance Bank also plans to launch its ₹1,200-crore maiden float. The Kerala Institute of Medical Science (KIMS), a multi-speciality hospital chain backed by True North, also hired bankers for its proposed ₹1,300-crore IPO, ET reported on July 1.
True North (formerly India Value Fund Advisors) manages a combined corpus of over $2.8 billion. It made two exits this year. It sold food ingredients maker VKL Seasoning to Swiss buyer Firmenich SA and Innovative B2B Logistics Solutions to Adani Logistics.
The recent troubles at DHFL could prevent HFFC from getting valuations of 4-5 times the book value, valuations home financiers fetched before the September 2018 debt crisis, a Mumbai-based investment banker said.
"Until the DHFL imbroglio is sorted out and liquidity concerns for NBFCs (non-banking finance companies) are addressed, it will be tough for an upcoming HFC (housing finance company) to get valuations of more than 2.5 times the book,” he added.
Last year, another PE-backed home financing major Aavas Financiers had hit the market with its ₹1,700-crore IPO, valued at more than 4 times the book. The government push for affordable housing made the housing finance sector attractive for PE funds.
In February, US fund Blackstone had acquired Aadhar Housing Finance, India’s largest independent affordable housing finance company that has AUM of about ₹10,000 crore.
IIFL India Private Equity Fund had acquired newly launched KadaiEshwar (KE) Housing Finance last year. Carlyle and
General Atlantic also own stakes in PNB Housing Finance.
Housing credit growth in FY20 is expected to be in the range of 13-15 per cent (lower than the compounded annual growth rate of 17 per cent in last three years), said a recent Icra report.