Bajaj Finserv, Bajaj Finance shares gain ahead of mortgage arm IPO

Special shareholder quota for Bajaj Finserv, Bajaj Finance shareholders

Shares of Bajaj Finserv and Bajaj Finance rose on Monday ahead of the Rs 7,000 crore initial public offering (IPO) announcement of mortgage lending arm Bajaj Housing Finance.

The IPO is expected to hit the market during the first half of September.

The IPO will have a special quota for shareholders of Bajaj Finserv and Bajaj Finance, both of whom are classified as ‘promoters.’

Shares of Bajaj Finserv rose 2.84 per cent, while Bajaj Finance gained 0.6 per cent.

Bajaj Finance has a 100 per cent stake in Bajaj Housing, while Bajaj Finserv holds 51.34 per cent in Bajaj Finance. Bajaj Housing’s IPO will comprise Rs 3,000 crore share sale by Bajaj Finance and fresh fundraise of Rs 4,000 crore.

The fresh fund will be raised to boost its capital base for future lending requirements. The record date for determining shareholders applying under the special quota could fall soon if the company announces its IPO dates.

“While the company is yet to announce the IPO pricing, the market is abuzz that it could be around Rs 80. Currently, shares are changing hands in the grey market at around Rs 120. As a result, a lot of IPO applicants will try to apply through the shareholder quota to improve their allotment chances,” said an investment banker.

According to the rules, someone who has even one share of either Bajaj Finserv or Bajaj Finance as on the record date can apply in the shareholder quota.

Bajaj Housing Finance offers home loans, loan against property, lease rental discounting and developer financing.

As of March 2024, the company’s assets under management (AUM) stood at Rs 9.14 trillion, growing at an annualised rate of 30.9 per cent between FY22 and FY24.

Its average ticket size for home loans is Rs 46 lakh, with an average loan-to-value ratio of 70.5 per cent, as of March 31.