EUR 93.85 For Business Accounts Only

Home First Finance IPO

Home First Finance (HFF) is an affordable housing finance company targeting first time home buyers in low and middle-income groups. The company aims to raise around US$160m in its India IPO. It is backed by True North, GIC and Bessemer and has recently obtained an investment from Warburg Pincus as well.

HFF has grown rapidly over the past few years, driven by an expansion in its branch network and large number of new customers. Over FY17-20, HFF’s loan grew at a CAGR of 62%, while its earnings grew even faster with NII growing at 68%, PPoP at 117% and PAT at 128% CAGR. It still remains largely focussed on housing loans and has pristine asset quality.

However, its funding sources lack diversity and its margin is artificially inflated by its high capitalisation. Furthermore, the company talks a lot about tech but a lot of its functions appear to be still very contact heavy and hence, salesforce/customer service dependent.

I have covered various aspects of the deal in my earlier notes, Home First Finance Pre-IPO - Riding on affordable housing and Home First Finance Pre-IPO - Earnings not showing the COVID strain but other metrics are. In this note I’ll run the deal through our ECM framework and talk about recent updates.