PE-backed PNB Housing Finance gains on debut after $449m IPO

The company sold 38.7 million shares at INR775 apiece, with neither of the two existing shareholders - Carlyle and Punjab National Bank - making exits. They previously owned the business through a 49-51 joint venture but have now been diluted as a result of the new share issue, with Carlyle holding 37.5% and Punjab National Bank 39%, according to a prospectus.

The stock opened at INR863 on November 7 and peaked at INR902.95 before falling back to close at INR890.60. As of late morning trading on November 8, it was up a further 7.2% at INR955.

A total of 45 anchor investors accounted for approximately 30% of the offering, including General Atlantic, Kuwait Investment Authority, GIC Private and assorted domestic insurance companies and mutual funds. VCCircle reported that General Atlantic acquired an additional INR5.01 billion shares on the open market, citing stock exchange data.

Carlyle assumed ownership of its stake in PNB Housing when it bought Destimoney Enterprise, a portfolio company of New Silk Route Advisors, last year for $257 million, according to AVCJ Research.

Founded in 1988, PNB Housing was India's fifth largest housing finance company (HFC) by loan portfolio as of September 2015, and had the second largest amount of public deposits in an HFC in India as of March 2015. It operates 47 branches and 16 processing hubs, with a distribution network that includes over 5,000 channel partners across India.

For the year ended March 2016, the company recorded INR27 billion in revenue, up from INR18 billion the year before. Over the same period, net profit rose from INR1.9 billion to INR3.3 billion, while the company's loan portfolio grew from INR40 billion to INR271 billion.

PNB Housing's non-performing assets (NPAs) accounted for 0.2% of its total loan portfolio as of March 2015, the lowest among India's leading HFCs, according to industry group ICRA; the following year they stood at 0.22%. The relatively low ratio of bad loans could be an advantage in India, where regulators and the government have grown increasingly concerned about the high levels of NPAs in the country's banking system.

PNB Housing will use the majority of the IPO proceeds to augment its capital base, in order to meet regulatory requirements. The remainder, not more than 25% of the net proceeds, will be used for general corporate purposes.

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• Topics
• South Asia
• Financials
• IPO
• India
• The Carlyle Group
• General Atlantic
• Financial Services