September 27, 2018 / 2:07 PM / 10 months ago

Aavas Financiers $239 million IPO gets tepid response

(Reuters) - An initial public offering of shares in Indian housing finance firm Aavas Financiers Ltd to raise 17.34 billion rupees ($238.83 million) was subscribed 0.9 times on the final day of the sale on Thursday, amid fears non-banking financial companies (NBFCs) are facing a credit crunch.

Investors have been unnerved by credit concerns that have engulfed one of the biggest NBFC names in India - Infrastructure Leasing & Financial Services (IL&FS) - which has this month defaulted on a series of its coupon payments and seen its debt downgraded by big ratings agencies to junk from AAA, within a span of less than two months.

That in turn sparked concerns around the viability of other NBFCs, leading to a sharp sell-off in the sector recently, higher borrowing costs for NBFCs, and growing fears of contagion.

Investors bid for 13.4 million shares of Aavas Financiers, which was earlier knows as Au Housing Finance Ltd, compared with 14.8 million shares on offer, stock exchange data as of 1300 GMT showed.

The company, which provides housing loan to customers belonging to low- and middle-income segment in semi-urban and rural areas, had set a price range of 818 rupees to 821 rupees a share in the IPO.

ICICI Securities and Citigroup Global Markets India are the book-running lead managers for the issue.

($1 = 72.6050 Indian rupees)

Reporting by Krishna V Kurup in Bengaluru; Editing by Subhranshu Sahu

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