India: Blackstone Hires I-banks For $678m Aadhar Housing IPO

Private equity (PE) giant Blackstone plans to take portfolio firm Aadhar Housing Finance public by June and has hired investment banks (i-banks) to start work on a ₹5,000 crore share sale, said three people aware of the development.

Blackstone has hired three i-banks, including Citigroup and ICICI Securities, to start work on the initial public offering (IPO), one of the three people said, requesting anonymity. “They will take it public in 2021, most likely in the first quarter of the next fiscal,” the person said.

Blackstone acquired Aadhar from Dewan Housing Finance Corp. Ltd in April 2019 for close to ₹3,000 crore. The PE has since invested ₹1,300 crore in the housing financier.

PE and venture capital firms are rushing the IPO plans of portfolio firms as investors continue to pump money into companies that are going public, encouraged by stellar listing gains. The Burger King India IPO that closed on 4 December was subscribed 157 times, the third share sale to be subscribed more than 150 times this year. The other two are Mazagon Dock Shipbuilders and Happiest Minds Technologies.

The Aadhar Housing IPO will largely comprise an offer for sale of shares by Blackstone, which owns 98% of the company, and a small portion of new shares to further capitalize the company, said the second person cited above, also requesting anonymity.

“They are looking at total fundraising of around $670 million (approx ₹5,000 crore). Blackstone will sell a large chunk of its shares through the offer for sale,” he added.

Blackstone, Citigroup and ICICI Securities declined to comment to emailed queries.

“Housing finance, especially affordable housing finance, has come back strongly after the initial disruptions caused by the pandemic. It is one of the best-performing segment in retail loans, and lenders like Aadhar Housing that are well-capitalized have been able to take advantage,” the second person said.

Aadhar Housing focuses on lower- and middle-income segments such as salaried, self-employed and agricultural income-based population.

As on 31 March, the firm had a portfolio of ₹11,432 crore spread across 294 branches in 20 states and Union territories, according to a 31 July report by Icra Ltd.

“Aadhar’s operations are focused on the affordable home loan segment with home loans comprising 85% as on 31 March. Given the low penetration level and the government’s thrust on housing for all by 2022, there are good growth opportunities for small-ticket size home loans. Moreover, with 90% of its loan portfolio comprising ticket sizes up to ₹20 lakh, the company is well placed to tap the demand,” Icra said.

This article was first published on livemint.com