Micro finance institution (MFI), Equitas Holdings Limited has filed its red herring prospectus (RHP) with market regulator Securities Exchange Board of India (SEBI) for its initial public offer (IPO). The issue will comprise of fresh issue and an offer for sale.
Around 93% stake of the firm is held by foreign investors including overseas incorporated bodies. IFC, CDC and India Financial Inclusion Fund are major shareholders in the firm.
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The firm plans to raise INR6 billion through the fresh issue of shares and provide an exit opportunity to its existing investors. An Offer for Sale of up to 130.8 million equity shares is proposed with price-band yet to be ascertained. Additional INR3 billion may be raised by selling shares to institutional investors ahead of the IPO. Edelweiss, ICICI Securities, HSBC and Axis Capital are managing the issue.
Investors like WestBridge Ventures, Sequoia Capital, Lumen Investment Holdings, Aavishkaar, Aquarius Investments and MVH plan to fully exit through the IPO. India Financial Inclusion Fund is offering to sell bulk of its holding while Dutch institution FMO, International Finance Corp (IFC), Sarva Capital Creation Holdings and Helion Venture Partners are opting for partial exit.
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Usage of Proceeds
The company plans to use INR5 billion from fresh issue for investing in subsidiaries supplement capital base. These subsidiaries include Equitas Microfinance Private Limited (EMFL) and Equitas Finance Limited (EFL). The residual would be used for Equitas Housing Finance Private Limited (EHL).
Incorporated in 2007 and led by PN Vasudevan, Equitas Holdings is India’s second-largest MFI by loan book. The firm provides varied financial services and focused on individuals and micro and small enterprises (MSEs). It has total 520 branches spread across the country as on June, 2015. Equitas operates through its subsidiaries and deals in microfinance lending, vehicle and housing finance. It was ranked among top 100 companies in India as a Great Place to Work as per company’s website.
PN Vasudevan holds 3.17% stake and will be giving up some of the part as offer for sale.
The company’s consolidated revenue rose from INR4.83billion in FY2014 to INR7.55billion in FY2015. Assets under Management (AUM) increased at compound annual growth rate of 43.6 per cent from INR7.23.9 billion in 2012 to INR21.43 billion in 2014 respectively. As on June 2015, the company’s AUM was INR23.19 billion with 2.58 million loan accounts in its microfinance business.
After SKS Microfinance, Equitas will be the second microfinance institution (MFI) to get listed. SKS Microfinance had raised INR1.6 billion in its 2010 public offering. The company is among the biggest MFI players in India.
Equitas will also be the first among small finance banks to raise funds publically and reduce its foreign shareholding to 49%. The proposed issue is second largest of the year with INR30 billion InterGlobe Airlines and would surpass the just concluded Coffee Day Enterprises Limited issue.