How the HFFC IPO Unfolded in 2021? Learn Key Events on a Timeline

Home First Finance Company (HFFC) is a housing finance company in India. It launched its first Initial Public Offering (IPO) on January 21, 2021, after postponing it earlier due to the pandemic. The IPO was open for three days and closed on January 25, 2021. The price for each share ranged from Rs. 517 to Rs. 518. The minimum investment requirement was 28 shares.

It must be noted that HFFC raised a total of Rs. 1,153.71 crore through this IPO. It consisted of a fresh issue of 51.15 lakh shares worth Rs. 265 crore and an offer for sale (OFS) of 1.71 crore shares valued at Rs. 888.72 crore. The funds raised were used to expand the lending portfolio and enhance market position. In this article, let’s understand several key events that unfolded during the HFFC IPO

• HFFC IPO was a major success and was oversubscribed 26.65 times.
• The shares were listed at Rs. 618 each at a 19% premium over the IPO issue price.
• With the funds raised, HFFC expanded into areas with increasing urbanisation and economic growth.

HFFC is a housing finance firm. It uses advanced technology to support its growth and operations. The company even employs “data science” to assess and approve loans (underwriting). Moreover, the company also has a strong system in place to manage the collection of loan payments.

With the funds raised from its IPO, HFFC planned to expand its business. This expansion was specifically planned for areas that are experiencing increasing urban growth and economic activity. 

The IPO was structured in a way to allocate:

• 50% of the shares for Qualified Institutional Buyers (QIBs)
• 35% for Non-Institutional Buyers
• 15% for Retail Investors

The OFS portion included significant contributions from several shareholders with some prominent names being True North Fund V LLP (Rs. 435.61 crore), Aether (Rs. 291.28 crore), Bessemer India Capital Holdings II (Rs. 120.46 crore), and more.

Notably, the IPO also featured an “anchor investor portion”. This allowed select institutional investors to purchase shares before the IPO opened to the public. This portion was available for subscription on January 20, 2021. 

The HFFC IPO was launched on January 21, 2021, and remained open for three days. It was closed on January 25, 2021. Let’s check out major events that occurred during these days:

The first day: January 21, 2021

By 1:20 P.M., the IPO had been subscribed 33%. Bids for 51.69 lakh shares were placed out of the total of 1.56 crore shares available. The interest in the IPO grew steadily, and by the end of the day at 5:00 P.M., the IPO was fully subscribed at 1.08 times.

A total of 1.62 crore shares were bid against an offer size of 1.56 crore shares. A breakdown by investor category showed that:

• Retail Investors subscribed 1.29 times
• Qualified Institutional Buyers (QIBs) subscribed 1.28 times
• Non-Institutional Investors (NIIs) subscribed only 12.7%

The second day: January 22, 2021

The HFFC IPO had already been fully subscribed. It reached around 2.2 times the available shares by the end of the second day. At that point, a total of 3.46 crore shares were bid for. The subscription status for different investor groups was:

• Retail Investors: 3.4 times
• QIB: 1.35 times
• NII: 61% of their allotted shares

The last day: January 25, 2021

As of 1:30 P.M. on January 25, the IPO was subscribed around 5 times. Now, bids were received for 7.8 crore shares. The interest from different investor groups was as follows:

• Retail Investors: 5 times
• QIB: 7.5 times
• NII: 1.54 times

The listing day: February 3, 2021

HFFC made its stock market debut on February 3, 2021. Its shares were listed at Rs. 618 each.  This listing was at a 19% premium over the IPO issue price of Rs. 517-518 per share. The HFFC IPO was a huge success and received bids for 41.64 crore shares, whereas only 1.56 crore shares were offered. This strong demand clearly shows significant investor confidence in HFFC's growth potential.

Interestingly, HFFC received approval from the Securities and Exchange Board of India (SEBI) for the IPO in March 2020. Following this, Orange Clove Investments BV (linked to Warburg Pincus LLC) bought a 25% stake in the company in October 2020.

This foreign institutional investor saw the HFFC IPO as a great opportunity to expand its reach in India’s financial services sector. Later, Orange Clove increased its stake to 30.62%. It even purchased an additional 5.03% shares from existing shareholders in January 2021.