Investors keen on a bite of housing pie with Hudco

MUMBAI: The government-owned Housing and Urban Development Corp.’s ( Hudco) initial public offering is set to excite investors as this could be the most reliable substitute for them after the Housing Development Finance Corp. in the real estate funding sector.

Although the company may be exciting, the pricing of the issue would be the key for investors looking to make profits. Hudco cannot be compared with any of the existing housing finance companies as it is into refinancing, unlike giving home loans to end consumers directly.

The state-run firm was approved for listing by the Cabinet on Wednesday, but there is no other detail yet. The government will now initiate discussion with investment bankers and appoint mangers for the sale. The government will dilute 10% stake in the company.

ET earlier wrote a story saying the company may raise Rs 500-1,000 crore through IPO.

Investors are bereft of much investment opportunities in housing finance sector beyond HDFC and smaller peers such as DHFL and Repco Home Finance. A listing of Hudco could fill in the vacuum as its profile is also a lot wider.

“Retail investors should go for Hudco IPO as it is a conduit to play in the domestic real estate market,” said Sanjiv Bhasin, executive vice president, markets and corporate affairs, IIFL. “They could double their investment returns over three years’ time. Housing sector is under-penetrated and holds huge potential.”

Hudco is totally owned by the federal government which does not lend to retail borrowers, but acts as a refinance company. It also funds many government programmes.