Retail investors have been eyeing Bajaj Housing Finance IPO ever since the RBI made it mandatory to list in public soon! Guess what? The firm is planning to raise over a billion dollars through the IPO. And yes, they’ll mindfully handle the minimum dilution and expected valuation range.
Now, the question is- Is this IPO worth your investment? Are there any important stuff that you need to know?
Well, the answer is yes, you need to analyze it thoroughly before making an investment decision. To simplify that, here we are presenting the keynotes that will help you to make an informed decision.
(A) Synopsis
Bajaj Housing Finance, a subsidiary of Bajaj Finance, is gearing up to make its debut on the stock market by 2025. Reason? To raise funds and to follow the guidelines of RBI!
Two years ago (September 2022), RBI classified Bajaj Housing Finance as an NBFC-Upper layer.
As per the RBI, if your company is classified as an upper-layer NBFC, then you need to follow a disciplinary structure and list within three years of being notified. That’s what happened with Bajaj’s subsidiary. And get this, they all have to go public by 2025.
It is not alone in this. Around 16 other companies, including the following, are in the same boat-
- Tata Sons
- HDB Financial Services
- Tata Capital Financial Services
- Aditya Birla Finance,
(Note: We have already discussed Tata Sons IPO and its plan in detail.)
The RBI’s not messing around. They’ve set a firm deadline of September 30, 2025, for Bajaj Housing Finance to get listed. But guess what? Bajaj Housing Finance isn’t quite ready to take the plunge yet. They’re saying, “Hold on a sec, we’re still a pretty young housing finance company, only about five and a half years old. Can we have a bit more time to get everything in order?“
To the uninitiated, let me describe Bajaj Housing Finance’s working strategies briefly. It offers home loans, loans against property, balance transfers, etc. In short, it is directly associated with residential and commercial properties.
It’ll be interesting to see how this IPO unfolds!
(B) IPO Details
Here are a few key points you need to note for Bajaj Housing Finance IPO-
- Execution: The IPO will be executed in the next 12-18 months.
- Target valuation for IPO: $900 million to $10 billion
- Anticipated IPO size: $1 billion
Bajaj Housing Finance has selected the following five investment banks as advisors for the IPO-
- Kotak Mahindra Capital
- Axis Capital
- BofA Securities
- JM Financial
- SBI Capital
Being a market maven you know that the exact IPO amount is subject to market conditions. But Bajaj Housing Finance is planning to raise funds while minimizing dilution.
As you have read above, the company is buying time from RBI for its IPO, even though they have to get listed in the next one and a half years.
Bajaj Finance has already informed the Bombay Stock Exchange (BSE) that its subsidiary, Bajaj Housing Finance, is taking steps to comply with the mandatory listing requirement.
Things will get clear on 24th April 2024! How? You may ask. The Board of Directors will convene on April 24 to discuss strategies for compliance!
(C) What did people familiar with the Bajaj Finance Limited say?
Three people familiar with the matter provided information anonymously. Here is what they said-
(C.1) Anonymous Person 1
According to one source familiar with the matter, Bajaj Housing Finance is exploring the possibility of an initial public offering (IPO) valued between $9 billion to $10 billion. This initiative aligns with the Reserve Bank of India’s requirement for “upper layer” NBFCs to go public within three years of notification.
The company aims to raise approximately $900 million to $1 billion through the IPO while considering factors like minimum dilution and expected valuation range. However, it’s important to note that no final decision has been made, and the details of the IPO could change based on market conditions.
(C.2) Anonymous Person 2
Another source revealed that Bajaj Housing Finance has already begun discussions with various domestic and international investment banks regarding the potential listing. They are in the early stages of negotiation and are expected to select a syndicate of investment bankers soon to kick off the deal. If successful, this IPO would mark the first public offering from the esteemed Bajaj Group in several years!
(C.3) Anonymous Person 3
A third individual familiar with Bajaj Housing Finance’s plans suggested that the IPO is likely to involve a combination of primary and secondary share offerings. This approach allows the company to raise capital while also providing existing shareholders with an opportunity to sell their shares.
These reports were published by MoneyControl.
(D) A Closer Look at Bajaj Housing Finance
Bajaj Housing Finance is a diversified Non-Banking Financial Company (NBFC) that serves over 76.5 million customers nationwide. Headquartered in Pune, the company offers financial solutions to individuals and businesses for various purposes, including home purchases, renovations, and commercial real estate investments.
Before wrapping up, let’s delve into the current status of Bajaj Housing Finance-
(D.1) Financial Performance
As of December 31, 2023, Bajaj Housing Finance reported robust financial figures. Its assets under management stood at Rs.85,929 crore, marking a significant 31% increase compared to the previous year. Disbursements also saw a corresponding 31% rise to Rs.25,308 crore. Additionally, the company’s net profit surged by 41% to reach Rs.1,350 crore during the same period.
(D.2) Market Performance
On March 27, Bajaj Finance’s stock closed at Rs.7,029 on the National Stock Exchange, reflecting a 1.7% increase from the previous close. Over the past month, the stock has shown an 8.16% increase. However, its parent company, Bajaj Finserv, closed the day at Rs.1,585, marking a slight decrease of 0.56% compared to the previous day’s close. Despite this, both stocks have seen relatively stable performance over the month.!
(E) Final Thoughts
Now, it’s time to wrap up! Always remember that investing in an IPO involves risks. Sometimes the company loses its charm after IPO. Other times it shines brightly with profits and good returns after being listed on stock exchanges. So, it is essential to conduct thorough research. You may seek professional advice before investing in Bajaj Housing Finance IPO!
