Bajaj Housing Finance IPO: Public Issue Opens For Subscription; GMP Hints Stellar Listing; Check Details

Bajaj Housing Finance Limited (BHFL), a major player in the industry, is all set to debut its Initial Public Offering (IPO). This event has generated immense anticipation among market participants, with BHFL's track record of providing mortgage loans since 2018 adding to its appeal. Backed by the Bajaj Group, the company disclosed on Friday, September 6, that it had already secured Rs 1,758 crore from anchor investors.

The public subscription period for the Bajaj Housing Finance IPO will span from September 9 to September 11. Investors can buy shares in the price band of Rs 66 to Rs 70 per share. This price range, coupled with the company's reputation and strong financial standing, is expected to attract attention from various investor groups.

The public offering has been meticulously structured to cater to different investor segments. A significant portion-up to 50%-has been reserved for Qualified Institutional Buyers (QIBs), which includes institutions like mutual funds and foreign portfolio investors. Another 15% of the issue is set aside for Non-Institutional Investors (NIIs), typically high-net-worth individuals, while retail investors will have access to at least 35% of the total offering.

BHFL has also made provisions under the shareholders' quota, setting aside equity shares valued at up to Rs 500 crore for individuals and Hindu Undivided Families (HUFs) who already hold shares in its parent companies. This exclusive allocation is a standard feature in IPOs where parent companies are publicly listed.

Bajaj Housing Finance is a non-deposit housing financing company that has played a pivotal role in India's mortgage loan market. As a wholly owned subsidiary of Bajaj Finance Limited, BHFL benefits from its parent company's resources and expertise. Bajaj Finance itself is backed by Bajaj Finserv Ltd, which holds a 51.34% stake in the company.

The IPO will not only allow Bajaj Housing Finance to raise capital but also satisfy a critical directive issued by the Reserve Bank of India (RBI). The central bank has mandated that non-banking financial companies (NBFCs) categorized as 'higher layer' must be listed on stock exchanges by September 2025. By initiating its IPO now, BHFL is positioning itself well in advance of this regulatory deadline.

The first day of the Bajaj Housing Finance IPO has shown promising signs of robust investor interest. According to data from the Bombay Stock Exchange (BSE), as of 11:03 am on the first day, the IPO had been subscribed 24%. Specifically, the issue received bids for 17.67 crore shares against the 72.75 crore shares on offer.

Retail investors, who are allocated at least 35% of the offering, have shown particular interest, with their portion being subscribed 29%. The non-institutional investor segment has fared even better, with a subscription rate of 54%. Interestingly, the qualified institutional buyers (QIB) portion is yet to see significant action but is expected to pick up momentum as the subscription window progresses. Additionally, the employee quota has seen a 7% subscription rate, while the shareholder portion stands at 33% subscription.

Bajaj Housing Finance's IPO consists of both an Offer for Sale (OFS) and a fresh issue of shares. The OFS involves the sale of equity shares by its parent company, Bajaj Finance, amounting to Rs 3,000 crore. The fresh issue of shares, meanwhile, will raise up to Rs 3,560 crore. The proceeds from the new issue will be used to bolster the company's capital base, ensuring it meets future capital requirements and is well-positioned to fuel its long-term growth strategy.

Leading investment banks, including Axis Capital Ltd, Goldman Sachs (India) Securities Pvt Ltd, SBI Capital Markets Ltd, JM Financial Ltd, IIFL Securities Ltd, and Kotak Mahindra Capital Company Ltd, are serving as book-running lead managers for the IPO.

As with many high-profile IPOs, Bajaj Housing Finance has been making waves in the grey market. The Grey Market Premium (GMP) for the company's shares stood at Rs 56 as of today, indicating that shares were being traded at a significant premium above the issue price. At the upper end of the IPO price band, the estimated listing price would be Rs 126 per share, representing an 80% increase over the IPO price of Rs 70.

The strong GMP reflects positive investor sentiment and suggests that the stock may see a strong listing performance. Analysts have observed that the GMP has remained consistently high, with the range fluctuating between Rs 36 and Rs 60 over the last 18 sessions. The sustained upward trend in the grey market serves as a positive indicator for the company's listing day performance.