After many years away, the Bajaj group is set to return to the public market with the projected mega listing. To earn money through an IPO, the Bajaj Finance subsidiary has submitted its draft documents to the market regulator Securities and Exchange Board of India (SEBI).
The non-deposit housing finance company Bajaj Housing Finance has submitted its introductory draft documents in an effort to raise ₹7,000 crore through an IPO. Draft Red Herring Prospectus (DRHP) includes an Offer for Sale (OFS) and new equity shares. DRHP says the parent company Bajaj Finance aims to divest its shares through the OFS to finance its housing segment.
Even though Bajaj Finserv also acts as a promoter, the DRHP claims that only Bajaj Finance is taking part in the offer to sell up to Rs 3,000 crore. The IPO totalling up to ₹7,000 crore consists of a new issue of equity shares worth up to ₹4,000 crore and an OFS by Bajaj Finance Limited, the selling shareholder, worth up to ₹3,000 crores, with each equity share having a face value of ₹10.
The IPO consists of reserve equity shares for subscription by qualified employees and reserve shares with a face value of ₹10 each for subscription by qualified promoter shareholders, like individuals and HUFs that are public equity owners of the promoters.
The book-running lead managers for the proposal are BofA Securities India Limited, Kotak Mahindra Capital Company Limited, Goldman Sachs (India) Securities Private Limited, Axis Capital Limited, IIFL Securities Limited, SBI Capital Markets Limited, and JM Financial Limited.
The Bajaj Finance Board gave a nod on Thursday, June 6, for Bajaj Housing Finance to list through an IPO. This IPO will comprise new issues valued at Rs 4,000 crore and an OFS, subjected to market circumstances and valuation. Following the approval, the DRHP was filled. The money raised by Bajaj Housing Finance’s new issuance will increase the company’s earnings to meet its ongoing funding requirements.
Bajaj Housing Finance Limited
As a non-deposit-taking home finance entity governed by the National Housing Bank, the company started in September 2015. While it provides loans on the property, home loans, lease rental discounting, and developer financing, its main attention is on individual retail housing loans. The developer financing is for people associated with building residential and commercial properties.
With AAA/Stable credit ratings for its long-term debt program and A1+ credit ratings for its short-term lending program, Bajaj Housing Finance holds the highest credit ratings from both CRISIL and India Ratings.
In 20 states and three UTs, covering 174 sites, there were 215 branches until March 2024.
In the fiscal year 2023–24, Bajaj Housing Limited reported a net profit of ₹1,731 crore, a 38% increase from ₹1,258 crore in the past year. Home loans as a percentage of total Assets Under Management (AUM) for the corporation decreased from 61.7% to 57.8% as of March 31, 2024.
After the group’s parent business, Bajaj Finserv went public in May 2008 and another promoter, Bajaj Finance, entered the market in 1994, this is the first public offering from the Pune-based group in almost 2 decades. This fiscal year, the issuing of this IPO has grown to be one of the biggest in the housing finance sector.
The two IPOs from the home finance firm this year were the Westbridge-backed India Shelter Finance (Rs 1,200 crore in December 2023) and the Blackstone-backed Aadhar Housing (Rs 3,000 crore issuance last month).
The main goal of the share offering is to abide by Reserve Bank of India (RBI) regulations stipulating that by September 2025, upper-layer non-banking financial companies (NBFCs) must be listed on stock markets.
Bajaj Housing Finance was included on the RBI’s list of upper-layer NBFCs, or companies, with assets under management of ₹50,000 crore, published in September 2022. In addition to Bajaj Housing, other upper-layer NBFCs are Tata Sons, HDB Financial Services, Tata Capital, and Aditya Birla Finance.
The housing company’s loan book for the nine months ending in December 2023 was Rs 85,929 crore, which was 31% more than a year ago at the same time. Net profit increased by 41% to Rs 1,350 crore, while net disbursements increased by 31% to Rs 25,308 crore.
Impact of IPO on Bajaj Finance Shares
Immediately after the BOD of Bajaj Housing Finance’s approval of a proposal to launch an IPO on Thursday, Bajaj Finance shares saw a boost on Friday, June 7.
Stocks of Bajaj Finance have returned 8.69% to investors over the last week and 13.95% throughout the preceding three months. Against a 52-week high of ₹8,190 a share on the BSE, shares of Bajaj Finance opened the day at ₹6,990 and climbed almost 5% to reach an intraday high of ₹7,298.00 on Friday. In the first deals of the day, Bajaj Finance shares increased 1.15% to reach the day’s high of Rs 7,006 on the NSE, continuing their recent upward trend.
