PE-owned Aadhar Housing Finance files for India IPO
Aadhar Housing Finance, an Indian affordable housing lender acquired by The Blackstone Group in 2019, is looking to raise up to INR73 billion ($1 billion) through a domestic IPO.
The offering will comprise INR15 billion in new shares and INR58 billion in existing shares held by Blackstone, according to a prospectus. This would be India’s fourth-largest private equity-backed IPO. Last year, SBI Cards & Payment Services took second place with a INR98.4 billion offering, enabling The Carlyle Group to make a partial exit.
Blackstone currently owns 98.72% of Aadhar, having paid a reported INR27 billion for the company, facilitating an exit for the International Finance Corporation (IFC). Entities controlled by the Wadhawan family were the major sellers. At the time, one of these entities, Dewan Housing Finance (DHFL), was under financial stress following a fraud scandal. Administrators have since launched legal action against the Wadhawan family in bankruptcy court.
Aadhar was launched in 2010 by DHFL and IFC to provide home loans for low-income borrowers, and it merged with DHFL’s affordable housing subsidiary DHFL Vysya in 2017. It claims to be India’s largest affordable housing finance provider with INR113.8 billion in assets under management (AUM) as of March 2020, 1.5x that of second-placed Aavas Financiers.
The company serves 166,000 customers, providing a range of mortgage-related loans for property acquisition, construction, and improvement, with an average ticket size of INR850,000. It has 292 branches in 20 states, with a workforce of 2,088.
Aadhar’s AUM rose 14% year-on-year for the 12 months ended March 2020. Over the same period, revenue increased from INR10.9 billion to INR12.1 billion, while net profit jumped from INR1.62 billion to INR1.89 billion. For the first six months ended September 2020, revenue and net profit were INR7 billion and INR1.56 billion, respectively.
India is expected to have a shortage of 100 million homes in 2020, 95% of it concentrated in lower-income groups. The government has set a target of building 12 million affordable homes in urban areas between 2015 and 2022.
India’s housing finance market was worth INR20.4 trillion in 2020 and is projected to reach INR32.1 trillion by 2025. At present, 60% of home loans outstanding are less than INR1.5 million in size. Affordable housing specifically is expected to be worth INR6.2 billion by 2025, up from INR3.96 trillion last year.
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