HFFC IPO opens today: details and analysis

HFFC IPO will allow existing investors and shareholders including True North, Bessemer Venture Partners, GIC, PS Jayakumar, and Manoj Viswanathan to partially exit their investments in the company.

In Oct and Nov last year, HFFC had issued over 22.40 lakh shares to Orange Clove Investments B.V. and 1.22 lakh shares to its employees via preferential allotment. Ergo, HFFC has slashed its fresh issue size from Rs 344.08 cr to Rs 265 cr due to its pre-IPO placement.

HFFC IPO details
The housing finance company has already raised Rs 346 cr from anchor investors on 20th Jan 2021. Additionally, HFFC is looking to raise ~1,200 cr via IPO, whose details are:

  • The IPO is open for subscription from 21st Jan 2021 to 25th Jan 2021 and is to be listed on both BSE and NSE. The likely listing date is 3rd Feb 2021
  • HFFC IPO consists of a fresh issue of up to Rs 265 cr and an offer-for-sale of up to Rs 888.71 cr by promoters and existing shareholders
  • The minimum lot size of the subscription is 28 shares. The price band of the IPO is set at Rs 517 — Rs 518 apiece
  • 50% of the IPO is reserved for Qualified Institutional Buyers, 35% for retail investors, and 15% for non-institutional investors
  • While KFin Technologies Pvt Ltd is the registrar of HFFC IPO, Axis Capital Ltd, Kotak Mahindra Capital Company Ltd, ICICI Securities Ltd, and Credit Suisse Securities (India) Pvt Ltd are the book running lead managers

Objective of HFFC IPO
Home First Finance Company plans to utilise the net proceeds of the IPO to augment its capital base for future growth requirements
Enjoy the benefits of listing the company on bourses

Valuation of HFFC
HFFC commands a moderate to fair valuation of 38 times its annualised PE compared to its peer Aavas Financiers, which is trading at 62 times.

About HFFC
Founded in 2010 by Jaithirth Rao and P S Jayakumar, Home First Finance Company India Limited (HFCC) is a non-bank lender, classified as a housing finance company. HFFC is a technology-driven financier in the affordable housing segment. Today, it has a presence in the urbanized regions of Gujarat, Maharashtra, Karnataka and Tamil Nadu.

HFFC focuses on first-time homebuyers in the low- and middle-income groups and offers home loans to salaried and self-employed professionals for constructing or purchasing homes. While salaried customers account for 72.6% of HFFC’s gross loan assets, self-employed customers account for 24.6%. Over the last 10 yrs, the company has offered over 50,000 home loans to borrowers in 60 districts of 11 states and 1 union territory.

HFFC is a rapidly growing company. The deployment of technology in its day-to-day operations and going paperless in its processes have aided the company’s growth trajectory. HFFC is backed by private equity funds Warburg Pincus (WP) and True North, and Singapore’s sovereign wealth fund GIC. Earlier this month, Warburg Pincus raised its stake in HFFC by 5.03% to 30.62%.

HFFC has strategically expanded to geographical regions with substantial demand for housing finance. It has diverse lead sourcing channels including architects, connectors, affordable housing developers, loan camps, micro marketing activities, contractors, employee and customer referrals, and branch walk-in customers. HFFC’s is known for efficient collections management, superior underwriting standards, and a high growth momentum on a smaller base.

Continue to read the financials, prospects, and risk of HFFC here.

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