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June 8, 2024

Bajaj Housing Finance Targets Rs 7,000 Crore through IPO Filing with SEBI

Bajaj Housing Finance, a wholly-owned subsidiary of Bajaj Finance, has taken a significant step towards expanding its financial capabilities by filing a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The company aims to raise approximately Rs 7,000 crore through an initial public offering (IPO). This financial endeavor comprises a fresh issue of equity shares worth up to Rs 4,000 crore and an offer for sale (OFS) amounting to Rs 3,000 crore, with each equity share having a face value of Rs 10.

The strategic move to go public follows the recent approval by the board of Bajaj Housing Finance, contingent upon favorable market conditions, to meet regulatory requirements. Bajaj Finance, the parent company, has also committed to offloading shares worth Rs 3,000 crore in its housing finance subsidiary. This IPO is not just a capital-raising exercise but a regulatory compliance measure mandated by the Reserve Bank of India (RBI). In September 2022, the RBI identified Bajaj Housing Finance among 15 Non-Banking Financial Companies (NBFCs) required to list their shares on stock exchanges due to their substantial loan books exceeding Rs 50,000 crore. The deadline for this listing is September 2025.

Bajaj Housing Finance intends to utilize the net proceeds from this IPO to bolster its capital base, ensuring it meets future business demands, particularly in onward lending. The capital infusion will play a crucial role in supporting the company’s growth trajectory and maintaining its competitive edge in the housing finance sector.

The company has appointed an impressive roster of lead book-running managers to steer the IPO process. This includes Kotak Mahindra Capital Company Limited, BofA Securities India Limited, Axis Capital Limited, Goldman Sachs (India) Securities Private Limited, SBI Capital Markets Limited, JM Financial Limited, and IIFL Securities Limited.

Financially, Bajaj Housing Finance has demonstrated robust performance. In the fiscal year 2024, the company reported a 38% year-on-year growth in net profit, reaching Rs 1,731 crore. Its capital adequacy ratio, inclusive of Tier-II capital, stood at a strong 21.28% as of March 31, 2024. This solid financial foundation underscores the company’s readiness for its public market debut.

Bajaj Housing Finance offers a comprehensive range of mortgage products tailored to both salaried and self-employed customers. These products include home loans, loans against property, and lease rental discounts. Additionally, the company provides construction finance and inventory finance to developers. As of March 31, 2024, home loans constituted 57.8% of the company’s total assets under management (AUM), a slight decrease from 61.7% the previous year. This diversification of product offerings and strong market presence positions Bajaj Housing Finance well for continued growth and stability.

The announcement of the IPO has already had a positive impact on its parent company’s stock. Bajaj Finance saw a 4% increase in its stock price following the news, reflecting investor confidence in the strategic direction and potential of Bajaj Housing Finance.

In summary, Bajaj Housing Finance’s decision to file for an IPO represents a pivotal moment in its growth strategy. By raising substantial capital, the company aims to enhance its financial strength and fulfill regulatory requirements, all while continuing to provide a diverse range of mortgage products to its customers. With a strong financial performance and a clear vision for the future, Bajaj Housing Finance is poised to make a significant impact in the housing finance market.

Read more Business related news on R9 News
Jhumpa Lahiri

Jhumpa Lahiri

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