LIC Housing Finance have interrupted India's monsoon to tap the international capital markets with a five million unit GDR offering. The $30 million deal was small, but provided the Indian market with some light relief in the holiday season.
The GDR priced at $5.97 representing a 5% discount to the stock's Rp145.55 close on Tuesday and parity with its pre-launch price on Friday. The deal was marketed over the weekend to investors in Asia, Europe and the US under the SEC's Rule-144A exemption.
Book closed 1.5 times oversubscribed under the lead of CLSA and Kotak Mahindra Securities. One unit equals two shares.
The stock rose about 4% yesterday (Wednesday) in line with positive trading in the mid-cap sector generally.
Investors like LIC Housing as a play on India's buregeoning middle class. It is a growing force in the mortgage market and has already captured a 7% market share in an industry that has itself grown at 37% since 2001. That said, the company remains attractively valued according to analysts: its shares trade at just six times earnings and one times its book value. Moreover, it is highly profitable thanks to a lean cost base and high loan-to-asset ratio.
Assuming Indians continue to get richer, and there is little reason at present to suspect they won't, it is a safe bet that they will continue to buy new homes. As a pure mortgage financier LIC Housing taps into that market view better than more diversified banking institutions.
