Bajaj Finance Arm Bajaj Housing Finance Files ₹7,000-Crore IPO Draft Papers: All You Need to Know

Bajaj Housing Finance, a part of the Bajaj Group, has submitted a Draft Red Herring Prospectus (DRHP) for an IPO worth ₹7,000 crore. This was filed with the Securities and Exchange Board of India (SEBI) on June 7. Bajaj Housing Finance, which started its mortgage lending in 2018, is a non-deposit housing finance company.

IPO Breakdown

The IPO consists of a fresh issue of shares worth ₹4,000 crore. Additionally, the parent company Bajaj Finance Ltd will sell shares worth ₹3,000 crore through an offer for sale.

The proceeds from the new share issuance will help boost the company’s capital base to support future lending needs. The firm also plans to benefit from listing its shares on stock exchanges, enhancing brand visibility and creating a public market for its equity shares in India. Some of the funds will be used to cover the expenses related to the IPO.

Share Reservation

The public offer will reserve shares for eligible employees and a separate reserve with a face value of ₹10 each for eligible owners of the promoters, including individuals and Hindu Undivided Families (HUFs) holding shares in the promoting entities.

Regulatory Context

In September 2022, the Reserve Bank of India (RBI) listed Bajaj Housing Finance among the upper-layer NBFCs, companies with assets over ₹50,000 crore. According to RBI guidelines, such companies must be listed by September 2025.

As reported by CNBC TV18, Bajaj Housing Finance is wholly owned by Bajaj Finance, which itself is 51.34% owned by Bajaj Finserv.

Book Running Lead Managers

The IPO is managed by Kotak Mahindra Capital Company Ltd, BofA Securities India Ltd, Axis Capital Ltd, Goldman Sachs (India) Securities Pvt Ltd, SBI Capital Markets Ltd, JM Financial Ltd, and IIFL Securities Ltd.

According to the DRHP, Bajaj Housing Finance’s peers include LIC Housing Finance (P/E of 7.3), PNB Housing Finance (P/E of 12.4), Can Fin Homes (P/E of 12.9), Aadhar Housing Finance (P/E of 18.7), Aavas Financiers (P/E of 3.3), Aptus Value Housing Finance (P/E of 24.6), and Home First Finance (P/E of 24.3).

Financial Performance

For the financial year 2023-24, Bajaj Housing Finance reported a net profit of ₹1,731 crore, up 38% from ₹1,258 crore in FY23. As of March 31, 2024, home loans made up 57.8% of the company’s total assets under management (AUM), down from 61.7% the previous year.