The IPO which will close for subscription on October 27, will be second largest issue of 2016 after ICICI Prudential Life Insurance’s Rs 6057-crore IPO. Around 22 IPOs have hit markets this year so far.
India's fifth-largest housing finance company is set to debut on Dalal Street, with its initial public offer (IPO) opening for subscription on October 25. PNB Housing Finance, from the Punjab National Bank stable is aiming to raise Rs 3000 crore. The company has fixed a price band of Rs 750-775 for its IPO.
So, before the issue opens, here are few things you must know about PNB Housing Finance:
1) Post IPO, its parent company PNB will reduce its stake to approximately 38-39 percent of issued share capital. Hence, PNB Housing Finance won't remain either a subsidiary of PNB or a government company. However after the issue, PNB will still be its single largest shareholder with 26 percent or 33 percent holding of the post-issue equity share capital.
2) It primarily offers customers housing loans for purchase, construction, extension or improvement of residential properties or for purchase of residential plots and non-housing loans in form of loans against property (LAP) to property-owning customers through mortgages over their existing property and any additional security. Also, non-residential premises loans (NRPL) for purchase or construction of non-residential premises; lease rental discounting (LRD) loans offered against rental receipts derived from lease contracts with commercial tenants and corporate term loans (CTL).
3) The finance company aims to utilise proceeds of the issue to augment capital base to meet future capital requirements and for general corporate purpose. As of June 30, 2016, its' Tier I capital is 8.40 percent of the risk weighted assets. Accordingly, a portion of the funds raised will be used for improving capital base for business and growth including towards onwards lending, payment of operating expenditure, purchase of assets and repayment of outstanding loans and interest.
4) According to the company's RHP, its strength lies in: #a Strong distribution network with deep penetration of key Indian urban centers #b Access to diversified and cost-effective funding sources #c Diversified product offering with specific focus on self-employed customers #d Prudent credit underwriting, monitoring and collection processes.
5) For the three months ended June 30, 2016, its basic earnings per share (EPS) was Rs 7.57 an in the full fiscal year EPS was at Rs 27.58.
6) Its loan portfolio constituted 98.73 percent of its asset under management (AUM) as of June 30, 2016. It entered into a securitisation transaction worth Rs 2440 crore in August this year. Its loan portfolio grew at a CAGR of 61.76 percent from Rs 3969.66 crore as of March 31, 2012 to Rs 27177.26 crore as of March 31, 2016. As of June 30, 2016, our loan portfolio had further increased to Rs 30900.64 crore. As of June 30, 2016, its non-housing loans constituted 29.69 percent of our total loan portfolio and our retail non-housing loans accounted for 78.27 percent of our total non-housing loan portfolio. The average loan size (at origination) of our retail non-housing loans as of June 30, 2016 was Rs 56.8 lakh, with a weighted average LTV ratio (at origination) of 46.49 percent.
7) Its borrowings constituted 86.63 percent of total liabilities as on June 30, 2016. Average cost of borrowings in the three months ended June 30, 2016 and in FY16, FY15 and FY14 was 8.65 percent, 8.67 percent, 9.26 percent and 9.30 percent respectively. For three months ended June 30, 2016, its total borrowings were Rs 30045.94 crore and our average cost of borrowings on an annualised basis was 8.65 percent.
8) It raised Rs 290 crore, Rs 210 crore, Rs 200 crore and Rs 200 crore in three months ended June 30, 2016 and in FY16, FY15 and FY13 respectively through long-term unsecured, redeemable, subordinated NCDs for Tier II capital. In fiscal years 2015 and 2017, it raised USD 100 million and USD 150 million as external commercial borrowings (ECBs) for durations of five years and seven years Outstanding subordinated debt was at Rs 900 crore as June 30, 2016 and outstanding loans from an aggregate of seven banks.
9) As of June 30, 2016, its gross non-performing asset (NPAs), as a percentage of its total loan portfolio, were 0.27 percent and net NPAs, as a percentage of total loan portfolio, were 0.1 percent. As of the same date, we made consolidated provisions for contingencies of Rs 203.92 crore representing 243.99 percent of its NPAs, which comprised Rs 25.71 crore as provision for its NPAs and Rs 178.21 crore as provision for our standard assets.
10) As of June 30, 2016 and as of March 31, 2016, 2015 and 2014, its provisioning coverage ratio (the proportion of gross NPAs for which provisions had been made) was 30.77 percent 36.25 percent, 66.82 percent and 51.47 percent respectively.
11) It has access to diverse sources of liquidity, such as term loans from banks and financial institutions, non-convertible debentures and other debt instruments, deposits, ECB, commercial paper, refinancing from the NHB and unsecured, subordinated debt, to facilitate flexibility in meeting our funding requirements.
12) Incorporated in 1988, the company boasts of 47 branches across northern, western and southern regions of India and 16 processing hubs and 7110 channel partners across different location in India.
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