SBFC Finance Gets Sebi Nod For Rs 1,200 Cr IPO

SBFC Finance Gets Sebi Nod For Rs 1,200 Cr IPO

NBFC Refiled DRHP in March

Among MSME-focused NBFCs, SBFC Finance has one of the highest AUM growth at a CAGR of 40%

MUMBAI, June 27n(The CONNECT) - Mumbai-based SBFC Finance Limited a non-deposit-taking non-banking finance company has received final observation from the capital markets regulator, Securities and Exchange Board of India (SEBI), for its initial public offering (IPO).

The initial share-sale comprises fresh issuance of equity shares worth Rs 750 crore and an Offer for Sale (OFS) of Rs 450 crore.

Per the company’s DRHP, SBFC is a systematically important, non-deposit taking non-banking finance company offering Secured MSME Loans and Loans against Gold, with a majority of our borrowers being entrepreneurs, small business owners, self-employed, salaried and working class people.

Among MSME-focused NBFCs in India, the company has one of the highest assets under management (AUM) growth, at a CAGR of 40% Fiscal 2019 to Fiscal 2022, per CRISIL Report.

The AUM has grown at a CAGR of 39.17% from ₹ 1,648.2 crore as of March 31, 2020 to ₹ 3,192.1 crore as on March 31, 2022, and was ₹ 36,28.2 crore on June 30, 2022. SBFC witnessed robust disbursement growth, at a CAGR of 39% between Fiscal 2019 and Fiscal 2022.

The company had refiled preliminary IPO papers with Sebi in March 2023.

The offer for sale comprises up to Rs 207.75 crore by Arpwood Partners Investment Advisors LLP, Rs 50.99 crore by Arpwood Capital Private Limited, Rs 41.26 crore by Eight45 Services LLP, and Rs 150 crore by SBFC Holdings Pte. Ltd. The offer also includes a reservation for subscription by eligible employees.

The Offer is being made through the Book Building Process, wherein not more than 50% of the Net Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Investors and not less than 35% of the Offer shall be available for allocation to Retail Individual Investors.

The company in consultation with merchant bankers may consider issuing equity shares on a private placement basis, aggregating up to Rs. 150 crores. If such Pre-IPO placement is completed, the fresh issue size will be reduced.

The proceeds from the fresh issuance worth Rs 750 crores will be used towards augmentation of its capital base to meet future capital requirements. As of December 31,2022 the companies CRAR stood at 33.23%.

Led by a veteran banker, Neeraj Swaroop, SBFC Finance, is one among the MSME-focused NBFCs in India, also it had one of the highest assets under management (“AUM”) growth, at a CAGR of 40% in the period from Fiscal 2019 to Fiscal 2022, according to a CRISIL Report mentioned in the DRHP. It has the lowest proportion of AUM arising out from the largest state in its portfolio and has maintained so despite its growth since its inception in 2017.

As of December 31, 2022, the average ticket size (“ATS”) of its Secured MSME Loans, Loans against Gold and other unsecured loans, on the basis of disbursed amounts was ₹ 0.98 million, ₹ 0.10 million and ₹ 0.69 million, respectively. SBFC Finance focuses on disbursing loans with a ticket size in the range of Rs 0.50 million to Rs 3.00 million and as of December 31, 2022, 86.48% of its AUM had ticket sizes in this range. It has a 137 branch footprint in 105 cities across 16 states and 2 union territories and has grown from 40,432 customers in FY20 to 94,997 customers as on December 31, 2022.

ICICI Securities Limited, Axis Capital Limited, and Kotak Mahindra Capital Company Limited are the book-running lead managers and KFin Technologies Limited is the registrar of the offer. The equity shares are proposed to be listed on BSE and NSE.

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