PNB Housing Finance, a subsidiary of Punjab National Bank (PNB), has priced its initial public offering (IPO). It aims to raise Rs 3,000 crore, and has fixed a price band of Rs 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 per cent from the current 51 per cent.
Among its peers, the company leads in terms of asset quality metrics with its gross non-performing asset (NPA) of 0.27 per cent. 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.
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In terms of loan book size, the firm is the fifth largest home finance firm, with its loan book at Rs 30,900 crore as of June 30, 2016. HDFC has a loan book more than eight times larger at Rs 2,65,731 crore.
PNB Housing Finance ended FY16 with revenues of Rs 2,699 crore, up around 51 per cent from previous year’s Rs 1,780 crore. For the year ending March 2016, the company reported net profit of `327.5 crore, up around 68 per cent and total expenses rose by 47.74 per cent at Rs 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 per cent of the shares are reserved for qualified institutional buyers (QIB) category, 15 per cent for high net-worth individuals (HNIs) and 35 per cent for retail investors.
Up to 60 per cent 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 Rs 75 per share. FE
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