Aadhar Housing Finance IPO: 10 key risks investors should know before subscribing to the issue

The Aadhar Housing Finance IPO consists of an OFS (Offer for Sale) of ₹2,000 crore made by promoter BCP Topco VII Pte Ltd, a subsidiary of Blackstone Group Inc., successful summation to a caller offering of equity shares valued astatine ₹1,000 crore.

On Tuesday, Aadhar Housing Finance Limited said that it had raised ₹898 crore from large investors.

A information of the proceeds from the caller connection would beryllium utilised for wide firm purposes, portion the remaining ₹750 crore volition beryllium utilized to fulfill aboriginal superior requirements for onward lending.

Aadhar Housing Finance provides a assortment of mortgage-related indebtedness products, including arsenic loans for the acquisition and operation of commercialized existent estate, location remodelling and hold loans, and loans for the acquisition and gathering of residential existent estate.

Here are immoderate of the cardinal risks listed by the institution successful its Red-Herring Prospectus (RHP):

• The erstwhile promoters of the concern work commercialized institution are the absorption of ongoing regulatory investigations by enforcement organisations, specified arsenic the Enforcement Directorate. The results of these investigations could person a antagonistic effect connected some the promoters, BCP Topco, and the marketplace worth of the company's equity shares.
• The commercialized financing work steadfast relies connected the prime and accuracy of the information that our third-party work providers and prospective borrowers submit. Their appraisal of imaginable borrowers' creditworthiness and the worth and rubric of the collateral whitethorn beryllium impacted by their reliance connected immoderate mendacious accusation provided by them, which mightiness person an interaction connected their business, operational outcomes, currency flows, and fiscal situation.
• The concern has had antagonistic nett currency flows successful the past and could bash truthful successful the future.
• Any emergence successful the percent of non-performing assets successful their AUM would person a antagonistic interaction connected their operations, currency flows, business, and fiscal health.
• The steadfast is susceptible to involvement complaint volatility, and successful the future, involvement complaint and maturity mismatches betwixt our assets and obligations mightiness effect successful liquidity problems.
• The company's capableness to bash concern and activities whitethorn beryllium negatively impacted by its indebtedness and the presumption and limitations imposed by its financing arrangements.
• Regulations and recommendations published by regulatory bodies successful India, specified arsenic the NHB and RBI, indispensable beryllium followed by the firm; nonaccomplishment to bash truthful mightiness effect successful higher compliance costs, a diversion of management's focus, and fines.
• Any imaginable summation successful provisioning brought connected by a emergence successful non-performing assets (NPAs) oregon the implementation of stricter guidelines for indebtedness nonaccomplishment provisioning mightiness little their nett aft taxes and person a antagonistic effect connected their operational outcomes.
• The company's registered bureau and firm bureau are the lone branches, income offices, determination offices, and firm offices that it owns. Their commercialized and operational outcomes whitethorn endure if they terminate oregon neglect to renew the lease, leave, and licensing agreements successful a timely and favorable manner, oregon astatine all. Furthermore, it's imaginable that galore of the lease, leave, and licensing agreements they motion are not decently registered oregon stamped.
• Any unfavourable developments pertaining to the Indian existent property manufacture whitethorn person a detrimental interaction connected the collateral worth for their loans, their business, and their operational outcomes.

Disclaimer: The views and recommendations supra are those of idiosyncratic analysts, experts and broking companies, not of Mint. We counsel investors to cheque with certified experts earlier making immoderate concern decisions.

Unlock a satellite of Benefits! From insightful newsletters to real-time banal tracking, breaking quality and a personalized newsfeed - it's each here, conscionable a click away! Login Now!

Published: 09 May 2024, 05:14 PM IST