India's Top Shadow Bank, Bajaj Finance, Unveils Housing Finance Arm in $782mn IPO

Bajaj Finance's Historic IPO

Bajaj Finance, the largest non-bank lender in India, successfully floated its housing finance arm in a significant $782 million IPO, marking the most substantial initial public offering in the nation this year.

Investor Response and Market Trends

Shares of Bajaj Housing Finance surged by **130%** to **Rs161** during the trading debut, driven by **strong investor interest** in the buoyant property and equity markets.

• Bajaj Housing Finance's assets under management grew by **31%** annually to **Rs970 billion ($12bn)**.
• The phenomenal demand saw bids exceeding **64 times** the shares offered.

Market Context and Future Plans

The IPO aligns with India's central bank's directive for large non-bank lenders to go public by **2025**, a move aimed at enhancing regulation in the sector. Additionally, Sanjiv Bajaj, chair of Bajaj Finserv, stated it was an opportune moment to list the company and diversify its funding avenues.

Indian markets are witnessing elevated valuations fueled by retail investor activities, which prompted concerns about maintaining loan quality. Nevertheless, Bajaj expressed confidence, asserting that personal loan credit quality should stabilize following temporary fluctuations during the pandemic.

Industry Dynamics and Competition

Despite the rise in bad loans, Bajaj Finance's customer base expanded by **21%** to **88 million** over the past year. The lender aims to address risky loan portfolios while remaining competitive in a growing market.

The market context indicates continued potential for growth, with predictions forecasting growth rates of **13% to 15%** for India's credit markets over the coming years.