Aadhar Housing Finance Files For IPO

On Monday, Blackstone backed-Aadhar Housing Finance Ltd filed a draft red herring prospectus with the Securities Exchange and Board of India (SEBI) to raise around Rs 7,300 crore via initial public offering (IPO). The company said that it will use the proceeds from the issue to increase Tier I capital base to meet its future capital requirements, which are expected to arise out of the growth of its business and assets.

The IPO is expected to be the largest for a financial services firm after SBI Cards.

ICICI Securities, Nomura, Citi and SBI Capital Markets are the book running lead managers for the IPO while law firms Cyril Amarchand Mangaldas and Khaitan and Co are the legal advisors.

As of 30 September, Aadhar Housing's CRAR-Tier I capital was 45.87%.

Blackstone, which acquired Aadhar Housing in 2019 from the troubled DHFL and Wadhawan Group for around Rs 2,200 crore, currently owns 98.7% of the firm and is likely to dilute around 30%, they said. "It's a fairly large transaction," one of them said.

As of March 2020, the lender reported a profit of Rs 189.38 crore against Rs 161.88 crore a year ago. Gross non-performing assets (NPAs) was at 1.08% from 1.02% a year ago.

The lender in its draft red herring prospectus said COVID-19 may affect operations in a number of ways and it expected the potential magnitude and duration of increasing customer delinquencies and fallout of the RBI mandated moratorium to be severe.

"Our customers (in particular, our retail customers) may default on loan and other payments or other commitments. Our delinquency ratios may substantially increase, and our asset quality may deteriorate", it said in the DRHP.