Home First Finance Company- HFFC IPO Review: Just 20 days into 2021 we will be having our third IPO, that too all in one week. Following IRFC and Indigo Paints, HFFC has decided to open its public offer for subscription on January 21.
In this article, we look into the HFFC IPO Review to cover the important information pertaining to the IPO. We also discuss the possible prospects of the company.
HFFC IPO- About the Company
Incorporated in 2010, Home First Finance Co. is a Mumbai-based technology-driven affordable housing finance company. The company primarily mainly caters to the low and middle-income groups. They do so by offering them housing loans to construct and buy homes. The company also offers other loans like loans against property, developer finance loans, and loans to buy commercial property.
One of their biggest strengths has been adapting to technological changes by rolling out their mobile app. The app helps users processing loan applications in a quick and transparent manner. In addition to this, the group has also developed a strong diversified network for gaining possible leads on loans. These include connectors, contractors, architects, affordable housing developers, and others. Over the decade the HFCC has sanctioned home loans to more than 50,000 customers.
The company also has strong penetration in the markets with 65 branches across 60 districts in 11 different states and a union territory in India. Its loan assets are spread throughout the country. Gujarat contributing 39% of the gross loan assets. This is followed by Maharashtra (21 percent), Tamil Nadu (10.5 percent), Karnataka (9.3 percent), Rajasthan (5.1 percent), and Telangana (5.0 percent). In addition, the NPA’s of the company stood at 0.74% as of September 2020.
(HFFC Mascot in an advertisement)
The company’s gross loan assets have grown at a compound annual growth rate (CAGR) of 63.4% between the fiscal year 2018-2020. According to CRISIL Research, the affordable housing outstanding credit will increase at 9% to 10% CAGR to ₹1190000 crores by 2023. As of September 2020, the company had an AUM of Rs 3,730 crore with a net worth of Rs 988 crore.
Despite being affected by the pandemic the company’s collection efficiency has recovered to 96%. The efficiency prior to the pandemic stood at 98%. According to promoter Manoj Viswanathan, only 3-4% of their customers are facing troubles. Despite this they expect their ross NPAs to increase to between 1% to 2% of total loans.
HFFC IPO Review – Key Information
Although the company had received Sebi approval last year their plans for an IPO were quashed due to the pandemic. During the period the company has reduced its fresh issue size to Rs 265 crore from Rs 344.08 crore due to its pre-IPO placement.
During this HFCC offered preferential allotment of over 22.40 lakh equity shares to Orange Clove Investments B.V. This was at a price of Rs 334.72 per share, for a consideration of Rs 75 crore. Employees were also included and allotted 1.22 lakh shares at Rs 334.72 per share, for a consideration of Rs 4.08 crore.
The IPO consists of a fresh issue of Rs 265 crore and an offer for sale of Rs 888.72 crore. The offer-for-sale consists of shares worth ₹435.61 crores by promoter True North Fund V LLP, ₹291.28 crore shares by promoter Aether (Mauritius) Ltd, ₹120.46 crores by investor Bessemer India Capital Holdings II Ltd, and ₹41.3 crores by PS Jayakumar and Manoj Viswanathan.
Following are the important details on the HFCC IPO:
| Particular | Details |
|---|---|
| IPO Size | ₹1,153.72 Cr |
| Fresh Issue | ₹265.00 Cr |
| Offer For Sale(OFS) | ₹888.72 Cr |
| Opening Date | Jan 21, 2021 |
| Closing Date | Jan 25, 2021 |
| Face Value | ₹2 per equity share |
| Price Band | ₹517 to ₹518 per equity share |
| Lot Size | 28 Shares |
| Minimum Lot Size | 1 i.e. ₹14,504 |
| Maximum Lot Size | 13 i.e. ₹188,552 |
| Listing Date | Feb 3, 2021 |
Axis Capital, Credit Suisse Securities (India), ICICI Securities, and Kotak Mahindra Capital Company are the book running lead managers to the issue. As per updates, the grey market has set a premium of ₹90-100 for the price band set at ₹517-₹ 518 per share. Once the IPO is concluded, the shares are likely to hit the bourses on February 3. The equity shares will be listed on both the exchanges — BSE and NSE.
Purpose of the HFFC IPO
The net proceeds from the issue will be used for the following purposes.
- To augment the company’s capital base to meet future capital requirements.
- To achieve share listing benefits on the exchange.
Closing Thoughts
In this article, we covered the HFFC IPO Review. This IPO opens today (January 21) and closes on Jan 25, 2021. The HFCC provides an opportunity to investors to be part of the company’s growth story. But investors must beware of the bearish markets and bearish sentiments that persist in the market. Happy Investing!
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
