Aadhar Housing Finance IPO: 10 Things to Know Before Investing

@LugAsTroy

This information is about the Aadhar Housing Finance Initial Public Offering (IPO), which allows the public to buy shares of the company for the first time. The IPO period is already open and closes on Friday, May 10th. Before investing, here are 10 important points to consider:

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1. Subscription Details:

Dates: The IPO subscription period is open from Wednesday, May 8th to Friday, May 10th.
Price: The price range for each share is between ₹300 to ₹315.
Minimum Shares: Investors must apply for a minimum of 47 shares and can then buy in multiples of 47.
Anchor Investors: Aadhar Housing Finance has already secured ₹898 crores from anchor investors, who are large institutional investors that commit to buying shares before the IPO opens to the public.

Investor Allocation:

The available shares are divided into three groups:

Retail Investors: 35% of the shares are reserved for individual investors like you and me.
Non-Institutional Investors (NIIs): 15% of the shares are allocated to investors who are not considered large institutions, such as high net-worth individuals.
Qualified Institutional Buyers (QIBs): 50% of the shares are reserved for large institutional investors like mutual funds and insurance companies.

Also Read - SBI NIFTY50 Equal Weight Index Fund: A Balanced Approach to Large-Cap Investing

2. Aadhar Housing Finance IPO: Simple Explanation

The company Aadhar Housing Finance wants to raise money through an Initial Public Offering (IPO). This means they will offer shares of their company for people to buy on the stock market.

Here's a breakdown of the IPO:

IPO Size: ₹3,000 crores (₹30 billion)
Offer for Sale: Existing shareholders will sell ₹2,000 crores worth of shares.
Fresh Issue: The company will issue new shares worth ₹1,000 crores.

What will they do with the money?

Lending: The main goal is to use the money for lending to more people who need housing loans.
General Purposes: Some money will be used for general business needs.

Benefits of going public:

Brand Recognition: Listing on the stock exchange will make the company more well-known.
Public Market: People will be able to buy and sell shares of the company easily.

Aadhar Housing Finance wants to raise money to grow their business and become more recognized. By selling shares on the stock market, they can achieve these goals.

3. About Aadhar Housing Finance

This section explains what Aadhar Housing Finance does and how big it is in simple terms.

What they do:

They mainly offer home loans to people who need smaller loans (less than ₹1.5 million) in India.
They are the biggest company in this area based on the money they manage for their customers (AUM) and their own value (net worth). This information is as of September 30, 2023, and compared to similar companies.
They also had the most active customer accounts in the financial year 2023 compared to others.

What loans they offer:

They have different loan options for building, fixing up, or buying homes and commercial properties.

How big they are:

They have a large network of offices across India.
As of September 30, 2023, they had 471 branches and 91 smaller sales offices.
These offices are spread across 20 states and union territories, covering a wide area in India.

4. Understanding the Risks of Investing in Aadhar Housing Finance IPO

Before investing in the Aadhar Housing Finance IPO, it's important to understand some potential risks involved. Let's break down two key points mentioned in the provided text:

1. Ongoing Investigations Involving Erstwhile Promoters:

Some previous owners of Aadhar Housing Finance are currently under investigation by government agencies like the Enforcement Directorate.
The results of these investigations could negatively affect Aadhar Housing Finance, its current major shareholder (BCP Topco), and the market price of the company's shares.

2. Significant Control by Aadhar Housing Finance Promoter:

Even after the IPO, the main promoter of Aadhar Housing Finance will still hold a large portion of voting rights in the company.
This means they will have a strong influence on decisions requiring shareholder approval, which may limit the influence of other shareholders.

5. Understanding Aadhar Housing Finance IPO: Who is the Promoter?

The company going public, Aadhar Housing Finance, has a promoter named BCP Topco VII Pte. Ltd. Let's break down what that means:

What is a Promoter? Think of the promoter as the parent company or main investor behind Aadhar Housing Finance. They played a key role in starting and supporting the company.

About BCP Topco VII Pte. Ltd.:

Type of Company: It's a private company, meaning it's not publicly traded on the stock market.
Location: Based in Singapore.
Established: December 27, 2017.
Main Activity: BCP Topco primarily focuses on investing in and holding other companies, like Aadhar Housing Finance.

BCP Topco VII Pte. Ltd. is the main company behind Aadhar Housing Finance, and its main job is to invest in and support companies like Aadhar.

6. Aadhar Housing Finance IPO: Understanding the Financials

This section explains how Aadhar Housing Finance has been performing financially, looking at their profits and income.

Profits are Growing:

In the financial year 2023 (FY23), the company made a profit of ₹544.8 crore. This is a 22% increase compared to the previous year (FY22) when they made ₹444.9 crore. Basically, they earned more money in FY23.

Income is also Increasing:

The company's net interest income, which is the difference between the interest earned and interest paid, was ₹1244 crore in FY23. This shows a 28.6% growth compared to FY22, indicating that they earned more from interest in FY23.

Strong Performance Continues:

Looking at just the first 6 months of the current financial year (up to September 2023), the company's net profit reached ₹343.61 crore. This is a significant 40% jump compared to the same period in the previous year (September 2022) when they earned ₹2454.4 crore.

Aadhar Housing Finance has been experiencing consistent growth in both profits and income, showing a positive financial trend.

7. Understanding Aadhar Housing Finance and its Competitors

When a company wants to sell its shares to the public for the first time, it's called an Initial Public Offering (IPO). Aadhar Housing Finance did just that, and to understand how they compare to others, we look at their "peers" - companies similar to them.

Here are some companies similar to Aadhar Housing Finance:

Aavas Financiers Limited: This company also provides loans for affordable housing, just like Aadhar.
Aptus Value Housing Finance India Limited: They focus on providing home loans in rural and semi-urban areas.
Home First Finance Company India Limited: Similar to Aadhar, they offer home loans to customers with limited income.
India Shelter Finance Corporation: This company provides loans for housing and also for small businesses.

By looking at these similar companies, we can better understand Aadhar Housing Finance's position in the market and how they stack up against the competition.

8. Aadhar Housing Finance IPO: Who's involved?

This section explains who's managing and organizing the Aadhar Housing Finance IPO:

Helping with the IPO Process:

Book Running Lead Managers: These are the main organizers of the IPO. They help the company decide on the price, find investors, and manage the whole process.

The companies involved are:

ICICI Securities Limited
Nomura Financial Advisory And Securities (India) Pvt Ltd
Citigroup Global Markets India Private Limited
Kotak Mahindra Capital Company Limited
SBI Capital Markets Limited

Keeping Track of Investors:

Registrar: This company keeps track of who buys shares in the IPO. They make sure everything is fair and organized.

The company involved is:

Kfin Technologies Limited

9. Aadhar Housing Finance IPO: Important Dates

This information is about when people who applied for the Aadhar Housing Finance IPO will find out if they got shares and when the shares will start trading on the stock market.

Here's a simple breakdown:

Monday, May 13, 2024: On this day, it will be announced who gets shares of Aadhar Housing Finance.
Wednesday, May 15, 2024: This is the day when the shares of Aadhar Housing Finance will be available to buy and sell on the stock market.

10. Understanding Grey Market Premium and Aadhar Housing Finance IPO

The information you've provided gives a good overview of the Grey Market Premium (GMP) and its relevance to the Aadhar Housing Finance IPO. Let's break it down further:

Grey Market Premium (GMP):

This is an unofficial market where IPO shares are traded before they are officially listed on the stock exchange.
The GMP reflects the estimated premium at which the IPO shares are expected to list compared to the issue price.
A positive GMP like +₹54 for Aadhar Housing Finance indicates investor confidence and potential for listing gains.