Blackstone-owned Aadhar Housing gets IPO approval after 15-month wait

 Blackstone-owned Aadhar Housing gets IPO approval after 15-month wait

Aadhar Housing Finance Ltd, the mortgage lender controlled by private equity giant Blackstone, has finally received regulatory approval for a planned initial public offering—more than 15 months after it filed for the share sale.

The Securities and Exchange Board of India gave its final observations on Aadhar Housing’s IPO proposal on May 5, according to the website of the capital markets regulator. SEBI’s final observations are akin to its approval.

Apart from Aadhar Housing, SEBI also approved the IPO proposals of four other companies last week. These were Landmark Cars Ltd, TVS Supply Chain Solutions Ltd, Bikaji Foods and Kids Clinic India Ltd, the operator of maternity and infant care hospital chain Cloudnine.

Aadhar Housing, which is 98.7% owned by the world’s largest buyout firm, had filed for an IPO in January 2021 to raise up to Rs 7,300 crore ($955 million). But lack of regulatory approvals delayed its plan.

Typically, SEBI approves IPO filings within two-three months. But in January this year, the capital markets regulator disclosed that it had sought comments on the IPO from another regulator. While SEBI didn’t elaborate, housing finance companies are regulated by the Reserve Bank of India.

Aadhar Housing’s IPO plan involved a fresh issue of shares to raise Rs 1,500 crore and a sale of shares by Blackstone for Rs 5,800 crore. The PE firm had acquired the lender in 2019 from debt-laden Dewan Housing Finance Co. Ltd, the Wadhawan Group, and IFC for around Rs 2,200 crore. Blackstone later invested Rs 1,300 crore in the company.

The SEBI approval comes at a time when stock markets have turned weak—benchmark indices have fallen 11.4% from their highs in January—on concerns related to high inflation, rising interest rates and geopolitical risks such as Russia’s invasion of Ukraine. This has prompted many companies to either defer their IPO plans or reduce the size of their share sales. For instance, state-run Life Insurance Corporation and logistics company Delhivery have both cut the size of their IPOs.

Mumbai-based Aadhar has 325 branches spread across 20 states of India. The company has assets under management of about US$1.9 billion, with gross bad loans of 2.25 and capital adequacy of 44.7% at December 2021.

The company posted profit after tax of Rs 340 crore for 2020-21, up from Rs 189 crore the year before. Profit for the six months ended September 2021 was Rs 211 crore, according to a Care Ratings report.

While the SEBI approval got delayed, Aadhar initiated a process to raise $75 million (Rs 574 crore) in debt capital from International Finance Corporation, the private-sector investment arm of the World Bank, via either a straight senior loan or non-convertible debentures for a tenor of up to seven years. The lender will use the money to extend financing to retail buyers of affordable or green affordable housing units.

Sumit Upadhyaya

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