The growing craze of IPOs in India has touched new levels as reflected by the humungous response to the public issue of Bajaj Housing Finance, finance service arm of Bajaj Finance. The ₹6,560 crore issue of the Bajaj Group company was subscribed 67.43 times on the last day of bidding today, with the IPO receiving highest-ever number of applications (88.94 lakh) and bids worth ₹3.24 lakh crore at the upper end of price band of ₹66-70 per share. This is the first time in 17 years that any company has topped ₹2 lakh crore marks in subscription amounts after Coal India in 2008.
The housing finance company received an overwhelming response from all three categories of investors, especially from the qualified institutional buyer (QIB) as the quota reserved for them was subscribed 222.05 times on the third and final day (Day 3) of bidding process. The QIB segment alone received record bids worth ₹2.6 lakh crore.
The portion set aside for non-institutional investors (NIIs) was booked 43.98 times, while the retail segment received comparatively muted bids as the quota for them was subscribed 7.41 times. The employee portion was subscribed 2.13 times. Subscription in NII category was ₹38,659 crore and that in retail category was ₹15,195 crore at upper end of price band.
As per the DRHP filed with the SEBI, the company had reserved half of the issue for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and the remaining 35% for retail investors, including reservation for employees.
According to market experts, Bajaj Housing Finance could possibly have a market cap of over ₹1 lakh crore at listing and may become the most valued housing finance company and upper layer housing finance NBFC on the Indian stock market. The stock was commanding a grey market premium of ₹75 in the unlisted market today, indicating listing price to be around ₹145, up 107%. The tentative listing dates of stocks on the BSE and NSE is September 16.
The IPO of Bajaj Housing Finance comprised a fresh issue of ₹3,560 crore and an offer for sale of ₹3,000 crore by parent Bajaj Finance. On the upper end of the price band, the market capitalisation of the Bajaj Group company is estimated at around ₹58,300 crore.
The housing finance company intends to use the net proceeds from issuance of fresh equities to augment its capital base to meet future business requirements of the company towards onward lending.
In September last year 2023, the RBI had released the list of 15 NBFCs in the upper layer under scale based regulation for NBFCs. As per the RBI norm, Bajaj Housing Finance shares must be listed by September 2025 under the current regulatory established by the central bank. The board of directors of the company decided to list shares on stock exchanges on June 7, 2024.
Founded in 1926, the financial services businesses of the Bajaj Group are primarily carried out through subsidiaries of Bajaj Finserv - one of which is Bajaj Finance, the parent company of BHFL. The BHFL offers financial solutions such as home loans, loans against property, lease rental discounting, and developer financing to individuals and corporate entities to purchase and renovate homes and commercial spaces.
As on March 31, 2024, BHFL had a network of 215 branches spread across 174 locations in 20 states and three union territories, which are overseen by six centralised hubs for retail underwriting and seven centralised processing hubs for loan processing. The company has been assigned long term credit ratings of CRISIL AAA with stable outlook and ‘IND AAA/stable’ as well as short term of ‘CRISIL A1+ and IND A1+’ borrowings programme.
Kotak Mahindra Capital Company Limited, Bofa Securities India Limited, Axis Capital Limited, Goldman Sachs (India) Securities Private Limited, SBI Capital Markets Limited, Jm Financial Limited and Iifl Securities Ltd are the book running lead managers of the Bajaj Housing Finance IPO, while Kfin Technologies Limited is the registrar for the issue.
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