Aadhar Housing Finance NCD

Aadhar Housing Finance NCD issue intends to raise up to ₹1,400 crore through non-convertible debentures (NCDs). The base size of the issue is ₹500 crore, with an option to retain over subscription up to ₹900 crore. Aadhar Housing Finance NCDs offer annual coupon of 9.60%, 9.65% and 9.75% on the three, five and ten year bonds, respectively.

Aadhar Housing Finance Ltd. (erstwhile DHFL Vysya Housing Finance Ltd) is a subsidiary of Wadhawan Global Capital (WGC). It is also backed by the World Bank through the equity participation of International Finance Corporation (IFC).

Issue Summary/Highlights:
  •  The issue will open on 14 Sept and close on 28 Sept. (likely to c.lose early)
  • The Aadhar Housing Finance Ltd NCD issue consists of Secured Redeemable Non-Convertible Debentures
  • For all categories ofinvestors the annual interest rate varies from 9.59% (annualized) to 9.74% deepening on the tenor i.e.  from 3-10 years. 
  • Aadhar Housing Finance LtdNCD Base Issue size is Rs.500 Crore with an option to retain oversubscription up to Rs. 900 Crore  ths aggregating up to Rs.1400 crores.
  • Minimum Rs.10,000/- ( 10 NCDs) collectively across one or  all the Options and in multiple of Rs.1,000 (1 NCD) thereafter. 
  • Allotment is only in Demat mode and is on first come first basis.
  • NCDs sjhall be listed only on BSE
  • Credit Rating of ‘CARE AA+ (SO)/ Outlook: Stable’ for an amount of Rs 3,000 Crore, by CARE Ratings Limited (“CARE”) and ‘BWR AA+ (SO) Outlook: Stable’ for an amount of Rs 3,000 Crore, by Brickwork Ratings India Private Limited (“Brickwork”). 
  • The Suffix SO is based on the credit enhancement in the form of Letter of Comfort provided by Dewan Housing Finance Corporation Limited (rated as BWR AAA Stable in December 2017) for the said facility in favour of the investors of erstwhile Aadhar Housing Finance Limited and erstwhile DHFL Vyasya.
Subscription & Updates: Aadhar Housing Finance Ltd NCD
19/07/18
CategoryBase Size (Rs. Cr)With Green Shoe (Rs. Cr)x on base Sizex on Total Size
QIB10028010.015.01
NII501400.090.05
HNI1754900.10.05
Retail1754900.570.29
Total50010002.341.17
About Indiabulls Commercial Credit :
  • Aadhar housing finance ltd (Aadhar), formerly known as DHFL Vysya Housing Finance Ltd, is one of the largest affordable housing finance companies in India servicing the home financing needs of the low income sections of the society.
  • Formed With the merger of DHFL Vysya and Aadhar Housing Finance, Aadhar has a pan-India presence. It operates in 20 states with over 275 branches. catering mainly to retail segment in affordable housing which gets almost 99 per cent of its loan book.
  • The company’s loan disbursement during the year 2017-18 were Rs 3,905 crore as against Rs 2, 338 crore in 2016-17.
  •  The average loan ticket size is Rs 8.25 lakh. Aadhar Housing Finance Ltd provides financing solutions with focus on customers whose monthly income is between INR 5000 to INR 50000.
IAadhar Housing Finance Ltd NCD issue Structure

Indiabulls Commercial Credit NCD issue is structured into following categories of Investors: 
Category I – QIBs– 20% of issue; Rs. 100  (280) crore
Category II – Non-Institutional Investors – 10% of issue; Rs.  Rs. 50  (140) crore
Category III – HNIs i.e. above Rs. 10 lakhs – 35% of issue; Rs. 175 (490) crore
Category IV –Individuals including HUFs – 35% of issue; Rs. 175  (490) crore

Investment  Terms and Options:

 Options/Series

III**IIIIVVVI
Interest PaymentCumuAnnualMonthlyAnnualMonthlyAnnual
 Issue Price (Rs/NCD)Rs 1,000     
 NatureSecured     
 Tenor3 years 5 years 10 years 
 Coupon NA9.60%9.25%9.65%9.35%9.75%
 Redemption Amount1,316.851,000Rs1,000Rs1,000Rs1,000Rs1,000
 Eff Yield (%) p.a. 9.60%9.59%9.65%9.64%9.75%9.74%

  • NCDs are taxable, thus the return get reduced by individual’s Tax bracket. 
  • TDS is not deducted if NCDs are held in Demat form.
  • Aadhar Housing Finance Ltdhas strong parental support of DHFL.
  • I do not intend to apply in Aadhar Housing Finance Ltd NCD issue as similar rate NCDs are available in the secondary market.. I may purchase these debentures (3 year option) on listing from secondary market if listed at a good discount. However deals in secondary markets are less with other complications and rates are not very different.
  • For those who are interested to apply, my preference is for 3 years option only as interest rates could harden over the long run. If I were to invest I would restrict it to a lower amount compared to Tata Finance NCD issue even though the rates offered are higher. 
  • These NCDs will be listed on stock exchanges. However in general  the spread  in NCDs is more as the Debt market is yet not fully developed in the country. Liquidity in group company India Bull housing debentures is not very high.
  • Since allotment is on first come first serve basis,  So those who desire to apply should do so on first day itself.

Standard disclaimer:  I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.