Housing and Urban Development Corporation Ltd (Hudco) has filed draft documents for an initial share sale, seeking to become the first state-run company to go public in nearly five years.
The government will sell 200.2 million shares in Hudco through the IPO, according to the draft red herring prospectus filed with the capital markets regulator Securities and Exchange Board of India.
Hudco’s share sale will be the first IPO of a state-run company since March 2012, when National Buildings Construction Corporation Ltd floated a public issue worth Rs 125 crore.
The IPO is part of the central government’s disinvestment programme through which it aims to Rs 56,500 crore in the financial year ending in March. Of the total, the government was looking to fetch Rs 36,000 crore from minority stake sale and the balance amount from strategic sale in companies like Hindustan Zinc Ltd and Bharat Aluminium Co Ltd.
The government has raised about Rs 23,500 crore through share sales in state-run companies so far this fiscal year, according to finance ministry data.
Apart from Hudco, the Centre intends to initiate share sale in unlisted companies such as aerospace and defence company Hindustan Aeronautics Ltd, shipbuilding and maintenance company Cochin Shipyard Ltd and Airport Authority of India Ltd, among half a dozen firms.
Here’s the snapshot of the IPO
Issue: The government owns 100% stake in the company. It will sell a 10% stake through the IPO. After the issue and listing, the government will get three years to trim its stake to 75% as per SEBI’s minimum public shareholding norms.
The IPO is estimated to be worth Rs 1,000 crore, said two bankers involved in the sale. This will value the New Delhi-based company at Rs 10,000 crore.
Bankers: IDBI Capital Markets & Securities Ltd, ICICI Securities Ltd, Nomura Financial Advisory and Securities (India) Pvt Ltd and SBI Capital Markets Ltd are managing the issue.
Company
Hudco was established in 1970 with an aim to provide loans for housing and urban infrastructure development across India. Hudco is one the Mini-ratna companies, a status that gives it a certain degree of financial and operational autonomy.
The company finances social housing and residential real estate by primarily lending to the state governments and their agencies, which, in turn, extend the finance or use it for the ultimate individual beneficiaries. It stopped sanctioning new social housing and residential real estate loans to entities in the private sector in March 2013, as per information made available in the prospectus.
In its 46 year of operations till September 2016, Hudco has sanctioned loans worth Rs 1.57 trillion (roughly $23.5 billion). Of this, Rs 61,230.54 crore, or 39%, were sanctioned to finance homes and the remainder was for urban infrastructure finance.
Financials
As on September 2016, Hudco’s total outstanding loan portfolio stood at Rs 36,119 crore, with 31.3% of this share going to the housing finance segment and the balance to urban infrastructure finance.
For the six months ended September 2016, Hudco reported a consolidated profit after tax of Rs 520.17 crore on consolidated revenue (operations) of Rs 1,700.14 crore. For 2015-16, Hudco reported consolidated revenue of Rs 3204.81 crore and profit after tax of Rs 1,076.86 crore.
Its top line has risen at a rate of 3.76% a year from 2011-12 to 2015-16, as per the prospectus.
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