Housing and Urban Development Corporation’s (Hudco) initial public offer (IPO) to divest the Centre’s 10% stake in the company could hit the market in mid-March, ending a five-year drought of PSU IPOs. The stake sale in Hudco could fetch the government up to R1,000 crore, the company being valued at around R10,000 crore. Currently, the government owns 100% stake in the techno-financial institution engaged in the financing and promotion of housing and urban infrastructure in the country.

Hudco had filed the draft red herring prospectus for the IPO with market regulator Sebi on December 30. “Sebi had sought more information, which has been provided. Its approval for the IPO is expected anytime,” a person with knowledge on the matter told FE. After Sebi nod, the department of investment and public asset management (DIPAM) will hold roadshows before the IPO hits the market around mid-March, the above person said.

Going by the upside seen in the stocks of PNB Housing Finance after its listing on November 7, 2016, officials are confident that Hudco issue will get a warm response from investors. Shares of PNB Housing Finance made stock market debut at R860/share, up 11% from its issue price of R775.

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Hudco is a wholly-owned government company with more than 46 years’ experience in providing loans for housing and urban infrastructure projects in India. It has been profitable since inception.

In rating agency ICRA’s opinion, the housing finance sector will register a growth of around 18% to 20% in FY17, compared with the 5-year CAGR of 18% from FY11 to FY16. The growth is likely to be supported by some pick-up in primary sales, new launches and a healthy growth in the affordable housing segment.

The last PSU IPO was in March 2012 when the government sold a 10% stake in National Buildings Construction Corporation for R125 crore. According to the available data, out of 157 profitable PSUs, 119 were yet to be listed on stock exchanges.

With listing of central PSUs virtually coming to a standstill, the government has now set itself stiff time-bound targets for listing of Central PSUs. According to the procedures outlined by the DIPAM on Friday, a profitable PSU would have to list on the stock exchanges within 165 days, after the administrative ministry is on-board for the plan.