The retail housing finance company Aptus Value Housing Finance India Ltd. is all set to open its IPO on 10 August 2021. The offer for sale (OFS) will consist of a fresh issue of 6.4 crore equity shares amounting to around Rs. 500 crores by existing promoters and shareholders. Their draft red herring prospectus (DRHP) filed on 14 May 2021 has received the nod of SEBI and hopes to raise as much as Rs. 3,000 crores from the IPO.
Let’s take a look at the company and the details of its upcoming IPO.
About the Company- Aptus Value Housing Finance
Aptus Value Housing Finance is one the largest housing finance companies in India, with over Rs. 3700 crores worth of assets under management. Their primary objective is to address the housing finance needs of self-employed individuals belonging to low and middle-income families. With many people in semi-urban areas in our country lacking access to home loans, this company generates steady and considerable profits.
They offer loans between Rs. 5 lakh and Rs. 25 lakh in rural and semi-urban regions in India to construct new homes, home improvement and residential housing complexes. Additionally, they provide business loans and loans against property and undertake lending activities such as valuation, sourcing, underwriting, credit assessment, collection, and legal collateral assessment.
- Largest housing finance company in South India as per AUM
- Presence in the large, underserved market having a lot of demand
- Robust credit risk management with one of the lowest NPA (non-performing assets)
- Established financial performance with high collection efficiency
- A large network of over 180 branches in India
- To augment the company’s capital base
- Meet future requirements for funds
- Benefit from the listing of shares on stock exchanges
- To meet issue related expenditure
The IPO comprises a fresh issue of equity shares worth Rs. 500 crores and an OFS of 6,45,90,695 shares. The IPO will close on 12 August 2021 with a face value of Rs. 2 per equity share. The company will list them on both the NSE and BSE stock exchanges. According to various market experts, the IPO will raise anywhere from Rs. 2,600 crores to Rs. 3,000 crores.
The key stakeholders participating in the issue of the stocks include:
- Westbridge Crossover Fund (5,00,000 shares)
- JIH II (2,78,79,135 shares)
- Aravali Investment Holdings (1,97,62,495 shares)
- Madison India Opportunities IV (99,97,855 shares)
- Padma Anandan (25,00,000 shares)
Aptus has set aside a certain quota for eligible employees. The book running lead managers for the IPO are ICICI Securities, Kotak Mahindra Capital Company, Citigroup Global Markets India and Edelweiss Financial Services, while KFin Technologies is the registrar.
The company’s promoters include M. Anandan, Padma Anandan and Westbridge Crossover Fund LLC.
Financial Status of the Company
Aptus Value Housing Finance is one of the largest housing finance companies as per AUM (Rs. 3791 crores as of December 2020).
The company has pristine asset quality with a very low net NPA (0.57% as of December 2020). Their capital adequacy is at 75.03%, and collection efficiency is at 99.20%. AVHF also has one of the lowest cost to income ratios at 26.4%, keeping their net profits high. In addition, they have a strong capital sponsorship with the following investors holding a 55% stake in Aptus:
- Sequoia Capital
- Westbridge Capital
- Malabar Investment Advisor
- Steadview Capital
- Madison India
Let’s now take a look at their financial statements for the previous three years.
|For the Year Ended on||Total Assets (Rs. In Million)||Total Revenue (Rs. In Million)||Profit After Tax (Rs. In Million)|
|31 March 2019||23,276.87||3,371.15||1,114.83|
|31 March 2020||37,467.24||5,237.20||2,110.12|
|31 March 2021||45,201.65||6,552.42||2,669.44|
AVHF is a well-established business servicing a niche that doesn’t have a lot of competition. With the profits of the IPO, they can expand their business to new states resulting in more increases in the prices of their stocks. Hence, this IPO could be a great investment opportunity. However, investing in equities always comes with various risks, and it is advised to thoroughly research a company before investing.
Frequently Asked Questions
- How much would it take to invest in the IPO?
The IPO comes with a face value of Rs. 2 apiece, but the actual price band and minimum and maximum allowed investment size has not been announced yet.
- When does the IPO open?
The IPO will open on 10 August 2021 and close on 12 August 2021.
- What is the company’s intention for the IPO?
Aptus Value Housing Finance intends to raise approx. Rs. 3,000 crores from the IPO to supplement their capital base for future requirements.