Home First Finance IPO: Here’s All You Need To Know
A laborer picks up bricks on the construction site of a housing project. (Photographer: Sanjit Das/Bloomberg News)

Home First Finance IPO: Here’s All You Need To Know

Home First Finance Co. will launch its initial public offering on Jan. 21, after its previous attempt was delayed by the Covid-19 pandemic last year.

The company plans to raise Rs 1,153.71 crore through a maiden offer of 2.22 crore shares. The price band for the offering has been fixed at Rs 517-518 apiece, according to the red herring prospectus reviewed by BloombergQuint. The company will utilise the IPO proceeds for augmenting its capital base to meet future capital requirements.

The IPO comprises fresh issuance of 51.15 lakh shares aggregating to Rs 265 crore, and offer for sale of 1.71 crore share aggregating to Rs 888.72 crore.

The issue is managed by Axis Capital Ltd., Credit Suisse Securities (India) Pvt., ICICI Securities Ltd. and Kotak Mahindra Capital Co. The company, in its filings, said up to 50% of the net offer will be reserved for qualified institutional buyers, 35% for non-institutional buyers and the remaining for retail investors.

The IPO comes at a time participation of retail investors in the equity markets in India and the world has increased following the pandemic-induced lockdowns.

The company in October 2020 raised Rs 79.04 crore at Rs 334.726 per share from a Warburg Pincus arm Orange Clove Investments BV and employees.

Key Details

  • Issue opens on: Jan. 21
  • Issue closes on: Jan. 25
  • Face value: Rs 2 per share
  • Price band: Rs 517-518
  • Fresh issue: Aggregating up to Rs 265 crore
  • Offer for sale: Rs 888.72 crore
  • Minimum bid size: 28 equity shares
  • Listing: National Stock Exchange of India Ltd. and BSE Ltd.
  • Book Running Lead Managers: Axis Capital, Credit Suisse Securities, ICICI Securities and Kotak Mahindra Capital

Business

Home First Finance is a non-bank lender and is classified as a housing financier.

Business Models

  • Home loans for salaried professionals.
  • Home loans for the self-employed.
  • Home construction loans.
  • Home extension and renovation loan.
  • Loan against property.
  • Loan for NRIs.
  • Home loans for senior citizens.
  • Home loan balance transfer.
  • Home loan top up.
  • Shop loans.
  • Loans for purchase of commercial property.

Started in August 2010, Home First Finance provides loans for purchasing assets, among other operations. It’s a technology-driven economical housing finance firm that targets first-time homebuyers in low and middle-income groups, too, according to the prospectus. Housing loans for purchase or construction of homes constituted 92.1% of its gross loan assets, as of Sept. 30, 2020.

The company operates 70 branches, spread across 60 districts in 11 states and a union territory in India. It has a diverse range of lead sourcing channels, including conducting loan camps and micro-marketing activities, and utilising employee and customer referrals and branch walk-in customers.

The company is managed by professionals and True North Fund V LLP and Aether (Mauritius) Ltd. Companies like Bessemer and Orange Clove Investments B.V. have acquired a stake in the firm.

Selling Shareholders

The selling shareholders include two promoter entities—True North and Aether.

Also read: IRFC IPO: Here’s All You Need To Know

Shareholding

After the IPO, public will own 66.3% of the company. Promoters True North and Aether will own 33.7%.

Financials

Home First Finance posted a profit after tax of Rs 53 crore in the six months ended September 2020.

Competitive Landscape

Its primary competitors are public sector housing financiers, state-run banks, private lenders (including foreign banks), financial institutions and other NBFCs.

Risks

  • Availability of cost effective funding source. Historically it has sought funding from public and private banks, the National Housing Bank and through assignment transactions.
  • Volatility in borrowing and lending rates: Finance costs represented 64.4% of its total expenses in the six months through Sept. 30.
  • Credit quality and provisioning: The net non-performing assets for the company stood at 0.51% at the end of Sept. 30.
BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.