PNB Housing Finance, a subsidiary of Punjab National Bank (PNB), has priced its initial public offering (IPO). It aims to raise `3,000 crore, and has fixed a price band of `750–`775. Bids can be made for a minimum of 19 shares and in multiples of 19 thereafter. The issue opens on October 25, 2016. The company had filed its draft red herring prospectus (DRHP) with markets regulator Securities And Exchange Board of India (Sebi) in July this year. The stake of PNB will be reduced to around 38% from the current 51%.
Among its peers, the company leads in terms of asset quality metrics with its gross non-performing asset (NPA) of 0.27%. At the upper end of its price band, PNB Housing Finance is issuing shares at 4.39 times its book value. Compared to this, market leader HDFC is trading at 6.27 times and Repco Home Finance at 5.07 times.
In terms of loan book size, the company is the fifth largest home finance firm, with its loan book at Rs 30,900 crore as of June 30, 2016. Housing Development Finance Corporation (HDFC), the largest player, has a loan book more than eight times larger than PNB Housing Finance at `2,65,731 crore.
PNB Housing Finance ended FY16 with revenues of `2,699 crore, up around 51% from previous year’s `1,780 crore. For the year ending March 2016, the company reported net profit of `327.5 crore, up around 68% and total expenses rose by 47.74% at `2,195.2 crore. The company has over 47 branches across the northern, western and southern regions of India and 16 processing hubs. The proceeds of the issue will be used to augment the capital base to meet the future capital requirements, improve distribution network and general corporate purpose.
According to guidelines put out by Sebi, 50% of the shares are reserved for qualified institutional buyers (QIB) category, 15% for high net-worth individuals (HNIs) and 35% for retail investors.
Up to 60% of the QIB portion has been reserved for anchor investors and one-third of the anchor investor portion has been reserved for domestic mutual funds. Five per cent of the QIB category, excluding the anchor investor portion, has been reserved for mutual funds on a discretionary basis. The issue has reserved 2.5 lakh equity shares for the employees at a discount of `75 per share.
Kotak Investment Banking, Bank of America Merrill Lynch, J M Financial, J P Morgan and Morgan Stanley are the global coordinators and book running lead managers (BRLMs) to the issue. On Tuesday, shares of Punjab National Bank closed at `140.65, up 2.93% on BSE.