General Atlantic bets $75 mn more on PNB Housing; mortgage lender up 15% on debut

By TEAM VCC

  • 07 Nov 2016
PNB Housing | Credit: Thinkstock

Private equity firm General Atlantic, which last month came in as an anchor investor in PNB Housing Finance Ltd’s initial public offering, bet more money on the company on Monday as the mortgage lender made a strong stock market debut.

General Atlantic purchased shares worth Rs 501 crore ($75 million) in PNB Housing, according to stock-exchange data. This translates into a 3.38% stake in the lender. The PE firm had picked up shares worth $7 million when the lender sold shares to a bunch of anchor investors ahead of its IPO last month. 

Singapore sovereign wealth fund GIC and Kuwait Investment Authority were also among the 45 anchor investors. PNB Housing had raised Rs 894.2 crore by selling shares to the anchor investors; it mobilised a total of Rs 3,000 crore through the IPO.

Meanwhile, PNB Housing’s shares listed at an 11.35% premium to their IPO price and then gained further. Shares of the company started trading at Rs 863 apiece on the BSE compared with the issue price of Rs 775. The shares rose as high as Rs 902.95 before ending at Rs 890.60 apiece, giving the company a market value of Rs 14,752 crore. The lender was seeking a valuation of as much as Rs 12,850 crore through the share sale.

The good start came after the initial share sale of PNB Housing was covered 29 times last month. Subscription was led by high-net-worth individuals and corporate investors, who bid for around 86 times the portion reserved for them. Institutional investors bid for around 37 times the shares reserved for them.

The mortgage lender joins a host of companies such as RBL Bank, diagnostics firm Thyrocare Technologies, auto parts maker Endurance Technologies and business services provider Quess Corp that have made strong debuts on the stock markets this year. 

PNB Housing received regulatory approval for the IPO last month and increased the IPO size from the Rs 2,500 crore it had planned to raise in the draft red herring prospectus filed in July. 

After the IPO, the stake held by state-run Punjab National Bank in the mortgage lender has dropped to about 38-39% from 51%. Private equity firm Carlyle Group’s stake has fallen to about 37% from 49%. It had acquired the stake last year when it purchased bulk of the business of New Silk Route-controlled financial services firm Destimoney in its first major buyout in India. 

The IPO was entirely a fresh sale of shares. The lender plans to use the proceeds from the share sale mainly to augment its capital base and for general corporate purposes. It plans to grow its business and loan portfolio by consolidating its market share and expanding into specific target markets such as the affordable housing segment. 

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