India Shelter Finance eyes ₹2,000 Cr Initial Public Offer (IPO)

It appears to be the season when IPOs are finally starting to look up again. While the new fiscal year FY24 is still very slow to take off, there appears to be some momentum in filings and IPO announcements. In the latest development, India Shelter Finance backed by Westbridge and Nexus,  is looking at a ₹2,000 crore IPO and has already initiated talks with the investment bankers. India Shelter Finance has a total network of over 180 branches spread across 15 Indian states. The core business offering of India Shelter Finance is the affordable housing finance segment and the offering of ticket loans against property

Brief on the proposed IPO of India Shelter Finance

The IPO of India Shelter Finance will predominantly comprise of a fresh issue component along with an offer for sale, in which some of the early investors will also participate. India Shelter Finance is headquartered in Gurugram near Delhi and has the backing of marquee private equity investors like Westbridge Capital and Nexus Venture Partners. The fresh issue portion will help boost the capital buffers, a must for every NBFC company. The OFS route would be to purely give an exit route to early investors and also enhance liquidity in the stock post listing. The overall IPO is slated to be around ₹2,000 crore. The company has reportedly mandated ICICI Securities Ltd, Kotak Mahindra Capital Company Ltd and Citigroup India as the book running lead managers (BRLM) for the proposed IPO.

Early indications about the company appear to be good

According to reports in the media, India Shelter Finance has been among the better performers in the affordable housing finance segment in terms of growth, profits and also in terms of asset quality. In fact, the company is reported to have fairly healthy levels of gross NPA and net NPAs. The main aim of the IPO is to make the best of rising competition in the industry and to buffer it by enhancing the capital base. The IPO will also ensure that India Shelter Finance is able to diversify its funding sources, improve its access to capital and reduce the cost of funding.

India Shelter Finance is a company with 13 years pedigree in the affordable home finance segment. It offers affordable housing loans as well as small ticket loans against property. In terms of client profile, the company predominantly caters to self-employed customers with informal income documents. That is the segment which is largely outside the purview of traditional banking. However, the experience of the company has been that they tend to be very conscious of their credit standing in society and hence default rates are extremely low, even when there is a financial crisis. That is the good part of the story.

India Shelter Finance has a product portfolio comprising of a range of products ranging from financing for new house purchases, home expansion and upgrades, home-building loans on previously owned land and loans against property. Most of the loans are very small to mid-ticket sized loans that are given to the persons outside the purview of traditional banking. Till date, India Shelter Finance has lent funds to more than 60,000 families and has in the process disbursed over ₹4,000 crore in loans to such customers.

India Shelter Finance was formerly known as Satyaprakash Housing Finance India Limited (SHFIL). There were granted the  certificate of Registration by the National Housing Bank (NHB) in October 1998. The business, back then was a traditional type of lending business. Later in 2010, the business was relaunched under the banner of India Shelter Finance by a group of professionals with experience across diverse businesses. It was only subsequently that major PE investors like Westbridge and Nexus had been onboarded.