1 INDIABULLS HOUSING FINANCE LIMITED (IBHFL) INVESTMENT RATIONALE The issue offers yields ranging from 8.60 % to 9.15% depending up on the Category of Investor and the option applied for. Opportunity to invest in one of the leading Housing Finance Company. Credit Rating of CARE AAA by CARE and BWR AAA, Outlook: Stable by Brickwork Ratings India Private Limited The NCDs are proposed to be listed on the BSE Limited ( BSE ) and the National Stock Exchange of India Limited ( NSE ). COMPANY PROFILE IBHFL is one of the largest housing finance companies ("HFCs") in India. IBHFL is a non-deposit taking HFC registered with the NHB. It is a notified financial institution under the SARFAESI Act. IBHFL focuses primarily on long-term secured mortgage-backed loans. The company offer housing loans and loans against property to the target client. The Company also offers mortgage loans to real estate developers in India in the form of lease rental discounting for commercial premises and construction finance for the construction of residential premises. As of March 31, 2016, the company had offices spread across over 110 locations in India. It also has two representative offices in Dubai and London to target NRI clients. Its presence across Tier I, Tier II and Tier III cities in India allows it to interact with and service its customers at the local level. Company s standalone borrowings as at June 30, 2016 were Rs crores. The company relies on long-term and medium-term borrowings from banks and other financial institutions, including external commercial borrowings, issuances of non-convertible debentures and commercial papers. As at March 31, 2016, 2015, and 2014, its consolidated gross NPAs as a percentage of its consolidated AUM were 0.84%, 0.85% and 0.83%, respectively, and its consolidated net NPAs (which reflect its gross NPAs less provisions for NPAs, except counter-cyclical provision) as a percentage of its consolidated AUM were 0.35%, 0.36% and 0.36%, respectively. As of March 31, 2016, 2015 and 2014, its standalone capital to risk (weighted) assets ratio ("CRAR") were 20.51%, 18.35% and 19.14%, respectively. For the Fiscal Years 2016, 2015 and 2014, its consolidated revenue from operations was Rs crores, Rs crores and Rs crores, respectively, and its consolidated profit after tax before share of profit attributable to minority interest was Rs crores, Rs crores and Rs crores respectively. Its consolidated revenue from operations and consolidated profit after tax grew at a CAGR of 23.8% and 22.3%, respectively, from Fiscal Year 2014 to Fiscal Year 2016.
2 Key Strengths One of the largest HFCs in India with strong financial performance, capitalization and credit ratings Company s market position and its focus on the affordable housing segment allow it to benefit from the growth potential in this segment arising from various government and policy initiatives. The company has long-term credit ratings of AAA (for its long-term loans and nonconvertible debentures) from CARE and Brickwork Ratings and AA+ (for its non-convertible debentures) from CRISIL and ICRA. The company also has the highest short-term credit rating of A1+ from ICRA, CARE, CRISIL and India Ratings and Research. Additionally, it has obtained a credit rating of AAA from CARE Ratings and Brickwork Ratings in relation to its subordinated debt programme. The company believes that its strong financial record and high credit ratings position it to take advantage of the growth in the HFC industry, provide it with significant competitive advantages, contribute to the growth of its business and provide a high degree of comfort to its stakeholders including shareholders, lenders and rating agencies. Access to diversified and cost effective funding sources Over the years, IBHFL has developed a diversified funding base and has established strong relationships with its lenders. Its lenders include PSU and private banks, mutual funds, insurance companies, provident funds, pension funds and other financial institutions. IBHFL believes that its strong financial performance, capitalisation levels and high credit ratings give considerable comfort to its lenders and enable it to borrow funds at competitive rates, thereby lowering its overall cost of borrowings Strong network and pan-india presence and brand Its geographical reach within India across Tier I, Tier II and Tier III cities allows it to target and grow its customer base. As at June 30, 2016, its presence in over 110 locations across India allows it to undertake loan processing, appraisal and management of customer relationships in an efficient and cost effective manner. The company believes that its customer-oriented approach and efficiencies have aided it in achieving customer loyalty and have established it as one of the leading HFCs in India. IBHFL was awarded Business Superbrand by Superbrand India 2016, Best Affordable Housing Finance Company of the Year by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) at the ASSOCHAM Housing Excellence Awards in Fiscal Year 2016, the Housing Finance Company of the Year by Accommodation Times in Fiscal Year 2016, the Best Housing Finance Company by Realty Plus in Fiscal Year 2016, the Excellence in Home Loan Banking by CMO Asia and Asian Confederation of Businesses, the "Best Housing Finance Company" of the Fiscal Year 2014 by ASSOCHAM, and the "Fastest Growing Housing Finance Company" in the year 2014 by National Real Estate Development Council (NAREDCO). Technology advancements aimed at increasing customer accessibility IBHFL is one the first home lenders to offer the e-home Loans facility to the customers. The e-home Loan is a technological endeavour that enables its home loan customers to avail of paperless loans through their computers or mobiles devices. With this technology, the entire process of loan origination (from loan application to approval) can be managed through the devices thus obviating the need for branch visits. This results in significant customer convenience as it provides for a seamless loans approval process remotely, and at times convenient to the customer. IBHFL also expect to be able to enhance its access to customers in regions where we do not have branches through its e-home facility. Additionally, this also results in reduced operational costs and overheads aimed at increasing its margins.
3 ISSUE Structure Issuer Type of instrument/ Name of the security/ Seniority/Nature Mode of the issue Lead Managers Issue Base Issue Option to retain Oversubscription Amount Interest on application amounts received which are used towards allotment of NCDs Interest on application amounts received which are liable to be refunded Face value/issue Price (in Rs) Put/Call option Minimum Application size and in multiples of NCD thereafter Market Lot/ Trading Lot Pay-in date Credit ratings Listing Issuance mode of the instrument* Trading mode of the instrument Issue opening date Issue closing date ** Security and asset cover Deemed date of Allotment Indiabulls Housing Finance Limited Secured and Unsecured Redeemable Non-Convertible Debentures Public issue A. K. Capital Services Limited, YES Securities (India) Limited, Edelweiss Financial Services Limited, Axis Bank Limited, IIFL Holdings Limited, IndusInd Bank Limited, SBI Capital Markets Limited and Trust Investment Advisors Private Limited Public Issue by the Company of Secured NCDs and Unsecured NCDs aggregating up to Rs 3500 crores with an option to retain oversubscription up to Rs 3500 crores for issuance of additional Secured NCDs and Unsecured NCDs aggregating up to Rs7000 crores. The Unsecured NCDs will be in the nature of Subordinated Debt and will be eligible for Tier II capital. Rs 3500 crores Rs 3500 crores The Company shall pay interest on application amount, as per the Effective Yield applicable to the relevant Series of NCD (as per the Category of the Investor), allotted to the Applicants, other than to ASBA Applicants, subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended, as applicable, to any Applicants to whom NCDs are allotted pursuant Issue from the date of realization of the cheque(s)/demand draft(s) up to one day prior to the Deemed Date of Allotment. The Company shall pay interest at the rate of 6.00% p.a. on application amount which is liable to be refunded to the Applicants, other than to ASBA Applicants, in accordance with the provisions of the SEBI Debt Regulations and/or the Companies Act 2013, or other applicable statutory and/or regulatory requirements, subject to deduction of income tax under the provisions of the Income Tax Act, 1961, as amended, as applicable, to any Applicants to whom NCDs are allotted pursuant to the Issue from the date of realization of the cheque(s)/demand draft(s) up to one day prior to the Deemed Date of Allotment. However, the Company shall not be liable to pay any interest on monies liable to be refunded in case of (a) invalid applications or applications liable to be rejected, (b) applications which are withdrawn by the Applicant and/or (c) monies paid in excess of the amount of NCDs applied for in the Application Form. Rs 1,000 per NCD Not applicable Rs 10,000 (10 NCDs) collectively across all series and in multiple of Rs 1,000 (one NCD) thereafter across all series One NCD Application Date. The entire Application Amount is payable on Application. The NCDs proposed to be issued under this Issue have been rated BWR AAA with Stable Outlook by Brickwork and CARE AAA (Triple A) by CARE. For the rationale for these ratings, see Annexure A & B of the Prospectus The NCDs are proposed to be listed on NSE and BSE. The NCDs shall be listed within 12 Working Days from the date of Issue Closure. For more information, see Other Regulatory And Statutory Disclosures in the prospectus. Both physical and dematerialised form In dematerialised form only 15-Sep Sep-16 The Secured NCDs proposed to be issued will be secured by a first ranking pari passu charge on the current assets (including investments) of the Issuer, both present and future; and on present and future loan assets of the Issuer, including all monies receivable for the principal amount and interest thereon. The Secured NCDs will have an asset cover of one time on the principal amount and interest thereon. The Issuer reserves the right to sell or otherwise deal with the receivables, both present and future, including without limitation to create a charge on pari passu basis thereon for its present and future financial requirements, without requiring the consent of, or intimation to, the Secured NCD holders or the Debenture Trustee in this connection, provided that a minimum security cover of one time on the principal amount and interest thereon, is maintained. No security will be created for Unsecured NCD in the nature of Subordinated Debt The date on which the Board or a duly authorized committee approves the Allotment of NCDs. All benefits relating to the NCDs including interest on NCDs shall be available to Investors from the Deemed Date of Allotment. The actual allotment of NCDs may take place on a date other than the Deemed Date of Allotment. * In terms of Regulation 4(2)(d) of the SEBI Debt Regulations, the Company will undertake this public issue of the NCDs in dematerialised form. However, in terms of section 8(1) of the Depositories Act, the Company, at the request of the Investors who wish to hold the NCDs in physical form will fulfil such request. However, trading in NCDs shall be compulsorily in dematerialized form. ** The subscription list shall remain open at the commencement of banking hours and close at the close of banking hours for the period as indicated, with an option for early closure or extension by such period, as may be decided by the Board or the Bond Issue Committee. In the event of such early closure of or extension subscription list of the Issue, the Company shall ensure that notice of such early closure or extension is given to the prospective investors through an advertisement in a leading daily national newspaper on or before such earlier date or extended date of closure. Applications Forms for the Issue will be accepted only from 10:00 a.m. till 5.00 p.m. (Indian Standard Time) or such extended time as may be permitted by the Stock Exchanges, on Working Days during the Issue Period. On the Issue Closing Date, Application Forms will be accepted only from 10:00 a.m. till 3.00 p.m. (Indian Standard Time) and uploaded until 5.00 p.m. (Indian Standard Time) or such extended time as may be permitted by the Stock Exchanges.
4 SPECIFIC TERMS FOR EACH SERIES OF SECURED NCDs Series I II III IV V VI VII Interest type Fixed Fixed Fixed Fixed Fixed Fixed Fixed Interest reset process NA NA NA NA NA NA NA Frequency of Interest Payment Annual Cumulative Annual Cumulative Monthly Annual Cumulative Minimum Application Rs 10,000 (10 NCDs) across all Series collectively In Multiples thereafter Rs 1,000 (1 NCD) Face Value of NCDs (Rs/ NCD) Rs 1,000 Issue Price (Rs/ NCD) Rs 1,000 Mode of Interest Payment Through various options available Tenor 3 Years 5 Years 10 Years Coupon (%) for NCD Holders in Category I and Category II 8.55% NA 8.75% NA 8.51% 8.85% NA Coupon (%) for NCD holders in Category III 8.65% NA 8.90% NA 8.65% 9.00% NA Coupon (%) for NCD holders in Category IV 8.70% NA 8.90% NA 8.65% 9.00% NA Effective Yield (per annum) For NCD holders in the Category I and the Category II 8.55% 8.55% 8.75% 8.75% 8.85% 8.85% 8.85% For NCD holders in the Category III 8.65% 8.65% 8.90% 8.90% 9.00% 9.00% 9.00% For NCD holders in the Category IV 8.70% 8.70% 8.90% 8.90% 9.00% 9.00% 9.00% Put and call option N/A Redemption Date (Years from the Deemed Date of Allotment) 3 years 5 years 10 years Redemption Amount (Rs/NCD) For NCD holders in the Category I and the Category II Rs 1,000 Rs 1, Rs 1,000 Rs 1, Rs 1,000 Rs 1,000 Rs 2, For NCD holders in the Category III Rs 1,000 Rs 1, Rs 1,000 Rs 1, Rs 1,000 Rs 1,000 Rs 2, For NCD holders in the Category IV Rs 1,000 Rs 1, Rs 1,000 Rs 1, Rs 1,000 Rs 1,000 Rs 2, *The Company shall allocate series VI NCDs wherein the Applicants have not indicated their choice of the relevant NCD series SPECIFIC TERMS FOR EACH SERIES OF UNSECURED NCDs** Series VIII IX X Interest type Fixed Fixed Fixed Interest reset process NA NA NA Frequency of Interest Payment Monthly Annual Cumulative Minimum Application Rs 10,000 (10 NCDs) across all Series collectively In Multiples thereafter Rs 1,000 (1 NCD) Face Value of NCDs (Rs/ NCD) Rs 1,000 Issue Price (Rs/ NCD) Rs 1,000 Mode of Interest Payment Through various options available Tenor 10 Years Coupon (%) for NCD Holders in Category I and Category II 8.65% 9.00% NA Coupon (%) for NCD holders in Category III and Category IV 8.79% 9.15% NA Effective Yield (per annum) For NCD holders in the Category I and the Category II 9.00% 9.00% 9.00% For NCD holders in the Category III and Category IV 9.15% 9.15% 9.15% Put and call option N/A Redemption Date (Years from the Deemed Date of Allotment) 10 years Redemption Amount (Rs/NCD) For NCD holders in the Category I and the Category II Rs 1,000 Rs 1,000 Rs 2, For NCD holders in the Category III and the Category IV Rs 1,000 Rs 1,000 Rs 2, *The Company shall allocate series IX NCDs wherein the Applicants have not indicated their choice of the relevant NCD series. **Unsecured NCDs offered under the Issue will be in the nature of subordinated debt. Therefore, in accordance with the Housing Finance Companies (NHB) Directions, 2010, Notification No. NHB.HFC.DIR.1/CMD/2010, as amended from time to time, Unsecured NCDs will be subordinated to the claims of other creditors and are free from restrictive clauses and are not redeemable at the instance of the debenture holder or without the consent of the supervisory authority of the HFC. Investors in the Issue who fall under Category IV and who are senior citizens on the Deemed Date of Allotment shall be eligible for additional coupon of 0.10% per annum provided the NCDs are held by the investors on the relevant record date applicable for payment of respective coupon and/ or redemption of NCDs across all series. Senior Citizen(s) have to provide self -attested copy of PAN as additional KYC document irrespective of the mode of application either through demat or physical for the eligibility of additional coupon of 0.10% per annum. In case of non receipt of copy of PAN along with the application form while applying for the NCDs of the Issue, the additional coupon of 0.10% p.a. will not be applicable.
5 Allocation Ratio QIB Portion Corporate Portion High Net Worth Individual Portion Retail Individual Investor Portion 20% of the Overall Issue Size 20% of the Overall Issue Size 30% of the Overall Issue Size 30% of the Overall Issue Size Who can apply? Category I Category II Category III Category IV Institutional Investors Non Institutional Investors High Net-worth Individual Investors ( HNIs ), Retail Individual Investors Public financial institutions, scheduled commercial banks, Companies within the meaning of section 2(20) of Resident Indian individuals and Resident Indian Indian multilateral and bilateral development financial the Companies Act, 2013; co-operative banks, and Hindu Undivided Families individuals and Hindu institution which are authorised to invest in the NCDs; societies registered under the applicable laws in through the Karta applying for Undivided Families Provident funds, pension funds, superannuation funds and India and authorised to invest in the NCDs; an amount aggregating to through the Karta gratuity funds, which are authorised to invest in the NCDs; Statutory Bodies/Corporations, above Rs 10 Lacs across all applying for an amount Venture Capital Funds/ Alternative Investment Fund Regional Rural Banks series of NCDs aggregating up to and registered with SEBI; Public/private charitable/ religious trusts which are including Rs 10 Lacs Insurance Companies registered with IRDA; authorised to invest in the NCDs; across all series of State industrial development corporations; Insurance funds set up and managed by the army, navy, or air force of the Union of India; Insurance funds set up and managed by the Department of Scientific and/or industrial research organisations, which are authorised to invest in the NCDs; Partnership firms in the name of the partners; Limited liability partnerships formed and registered NCDs Posts, the Union of India; under the provisions of the Limited Liability National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government of India published in the Gazette of India; and Mutual Funds. Partnership Act, 2008 (No. 6 of 2009); Association of Persons; and Any other incorporated and/ or unincorporated body of persons Who are not eligible to apply for NCDs? The following categories of persons, and entities, shall not be eligible to participate in the Issue and any Applications from such persons and entities are liable to be rejected: 1. Minors without a guardian name*(a guardian may apply on behalf of a minor. However, Applications by minors must be made through Application Forms that contain the names of both the minor Applicant and the guardian); 2. Foreign nationals, NRI inter-alia including any NRIs who are (i) based in the USA, and/or, (ii) domiciled in the USA, and/or, (iii) residents/citizens of the USA, and/or, (iv) subject to any taxation laws of the USA; 3. Persons resident outside India and other foreign entities; 4. Foreign Institutional Investors; 5. Foreign Portfolio Investors; 6. Foreign Venture Capital Investors 7. Qualified Foreign Investors; 8. Overseas Corporate Bodies; and 9. Persons ineligible to contract under applicable statutory/regulatory requirements. *Applicant shall ensure that guardian is competent to contract under Indian Contract Act, 1872 Allotments in Under Subscription: Under subscription, if any, in any Portion, priority in allotments will be given in the following order: i. Retail Individual Investor Portion ii. High Net worth Individual Portion iii. Corporate Portion iv. QIB Portion Within each Portion, priority in Allotments will be given on a first-come-first-serve basis, based on the date of upload of each Application into the electronic system of the Stock Exchange. Allotments in case of oversubscription: In case of an oversubscription, allotments to the maximum extent, as possible, will be made on a first-come first-serve basis and thereafter on proportionate basis, i.e. full allotment of NCDs to the Applicants on a first come first basis up to the date falling 1 (one) day prior to the date of oversubscription and proportionate allotment of NCDs to the Applicants on the date of oversubscription (based on the date of upload of each Application into the Electronic Book with Stock Exchange, in each Portion).
6 Modes of Making Application Applicants may use any of the following facilities for making Applications: 1. ASBA Applications through the Members of Consortium, or the Trading Members of the Stock Exchange only in the Specified Cities (namely, Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Rajkot, Jaipur, Bengaluru, Hyderabad, Pune, Vadodara and Surat) ( Syndicate ASBA ). For further details, see - Submission of ASBA Applications in prospectus. 2. ASBA Applications through the Designated Branches of the SCSBs. For further details, see - Submission of ASBA Applications in the prospectus and 3. Non-ASBA Applications through the Members of Consortium or the Trading Members of the Stock Exchange at the centres mentioned in Application Form. For further details, see Submission of Non-ASBA Applications (other than Direct Online Applications) in the prospectus. 4. Non-ASBA Applications for Allotment in physical form through the Members of Consortium, Consortium Members, sub-brokers or the Trading Members of the Stock Exchange at the centres mentioned in Application Form. For further details, please refer to Submission of Non-ASBA Applications for Allotment of NCDs in the Physical Form in the prospectus. Please note that clarifications and/or confirmations regarding the implementation of the requisite infrastructure and facilities in relation to direct online applications and online payment facility have been sought from the Stock Exchange and is subject to confirmation from Stock Exchange. Key Operational and Financial Parameters (Consolidated) (Rs.in crores) Parameters FY 2016 FY 2015 FY 2014 Networth# Total Debt of which Non Current Maturities of Long Term Borrowing Short Term Borrowing Current Maturities of Long Term Borrowing Net Fixed Assets Non Current Assets (Excluding Fixed Assets) Cash and Cash Equivalent Current Investments Current Assets ( Excluding Cash and Cash Equivalent & Current Investments) Current Liabilities ( Excluding Short term borrowing, Current Maturities of Long Term Borrowing) Non Current Liabilities Assets Under Management Off Balance Sheet Assets Interest Income (Including Treasury Income) Interest Expenses* Provisioning & Write-offs (net of recoveries) PAT Gross NPA (%)** 0.80% 0.80% 0.80% Net NPA (%)*** 0.30% 0.40% 0.40% Tier I Capital Adequacy Ratio (%)-Standalone 17.90% 15.20% 15.10% Tier II Capital Adequacy Ratio (%)-Standalone 2.70% 3.10% 4.10% * Interest Expenses means the total finance cost **Gross NPA % = Gross NPA / (Assets Under Management less Off Balance Sheet Assets) ***Net NPA % = (Gross NPAs less provisions for NPAs, except counter-cyclical provision) / (Assets Under Management less Off Balance Sheet Assets) # Net Worth=Share Capital+Reserves and Surplus+Money received against Share Warrants+Minority Interest-Goodwill on Consolidation