Aptus Value Housing Finance Ltd - IPO Update

Aptus value Housing caters to the fast growing low-to-mid end customers with a predominant focus on the self-employed segment. Despite this focus on the volatile self-employed segment, Aptus has managed to keep the gross NPAs under check. Here is a quick background of the company, Aptus Value Housing IPO

What you need to know about Aptus Value Housing

Aptus Value Housing commenced business in the year 2010 and has been in the entry level segment catering to self-employed professionals and also to salaried individuals. The company is still quite small in terms of size because its assets under management or AUM stands at just about Rs.3,791 crore. Out of this AUM, nearly 73% of the AUM represent loans given to self-employed professionals and businessmen with the balance 27% being extended to salaried individuals.

Some of the financial metrics of the company as of Dec-20 are fairly impressive. For example, Aptus Value Housing had net NPA (non-performing assets) levels of just 0.57%, indicating that loan losses, if any, are substantially provided for in the financial statements. The company had a comfortable capital adequacy of 75.03%, which is well above the statutory requirement for HFCs or housing finance companies. This also means that the company can comfortably enhance its lending book without worrying too much about capital buffers. 

The company has repeatedly pointed out that this self-employed entry level segment is normally very cautious about credit records since they cannot afford to be black listed in the credit market in any form. Hence, they ensure to make their EMI payments on time, even in the midst of tough financial conditions. This is evident from the fact that Aptus Value Housing enjoys collection efficiency of 99.20%.

Details of the proposed issue of shares to public

Aptus Value Housing has already filed the draft red herring prospectus (DRHP) with SEBI and the issue is slated somewhere around late August 2021. The issue will consist of a fresh issue component and an offer for sale. The fresh issue component will be for Rs.500 crore while the existing shareholders of the company will offer a total of 6,45,90,695 shares (645.91 lakh shares) by way of offer for sale. The OFS will not alter the capital base nor lead to any fresh fund infusion into the company as it represents only a transfer of ownership. Only the fresh issue component of Rs.500 crore will enhance the capital base of Aptus.

The total size of the issue will be around Rs.2,600 crore to Rs.3,000 crore. At the upper end of the issue size, assuming that Rs.500 crore will be fresh issue, the pricing will be around Rs.465 per share. While the company has already go the approval from SEBI for the DRHP, it still needs to file the RHP with the Registrar of Companies (ROC) before the issue price can be decided. But based on DRHP filing data, one can expect a pricing of the issue with an approximate upper band of around Rs.465 per share.

The company has a marquee list of investors on its roster which includes names like Westbridge Capital, Malabar Investments, Sequoia Capital, Steadview Capital, Madison Group; among others. Some of these investors will be also looking to offload some of their holdings as part of the OFS.

Applications of the IPO proceeds

Out of the total IPO size of Rs.2,600 crore to Rs.3,000 crore, only Rs.500 crore will be by way of fresh issue. These funds will be used for enhancing the capital buffer of the company to fund future growth.