Central Bank of India plans to launch an initial public offering (IPO) of its home finance subsidiary, said a top official. Central Bank of India holds 64.4% stake in Cent Bank Home Finance Ltd and some of this stake is primed to come down following the IPO in the third quarter of FY 2016.
Speaking on the occasion of Central Bank of India’s quarterly results, BK Divakara, Executive Director, said the maiden public issue will hit the market once other shareholders agree on the valuation. Divakara also serves as the Chairman of Cent Bank Home Finance Ltd.
With 16% equity stake, National Housing Bank is another important shareholder in Cent Bank Home Finance while Unit Trust of India (12.8%) and Housing & Urban Development Corporation HUDCO (6.8%) hold the remaining shares.
Last year, Central Bank of India infused INR4.2 crore in Cent Bank Home Finance which has a strong focus on small towns and cities such as Gwalior, Jaipur, Nagpur and Surat. Since starting operations in 1991 as Apna Ghar Vitta Nigam Ltd, the subsidiary has 18 branches in seven states and one union territory.
Cent Bank Home Finance posted net profit of INR12.11 crore on total operating income of INR83.22 crore in FY 2015. The home loan company’s loan book stood at INR800.5 crore as on March 2015.
Although the home finance market is dominated by big players like HDFC and ICICI Bank, niche players like Repco Home Finance have found enough customers in smaller towns and cities.
