Chennai-based microfinance player Equitas Holdings has announced further details of its upcoming IPO. The public issue is set to open on 5 April and will close on 7 April. Axis Capital, ICICI Securities, HSBC and Edelweiss Financial Services are managing the Equitas Holdings IPO. Price band of the IPO has not been released yet but it is understood that the company will mobilize close to INR2,000 crore.
According to its red herring prospectus, the IPO will involve a fresh issue of INR720 crore, marking an increase from the earlier plan to raise INR600 crore. In addition, 13.24 crore shares will be sold by existing shareholders through the offer for sale (OFS) route. This is also an increase from the 13.08 crore shares the investors were planning to sell earlier. The company, which has also received small finance bank license from the RBI, counts International Finance Corporation (IFC), CDC Group, and Sequoia among its prominent investors. WestBridge and Aavishkaar also hold stakes in the company. Almost all the shareholders will be partly offloading their shares. This required from the regulatory standpoint which mandates that foreign shareholding in small finance banks cannot exceed 49% 74%. Equitas founder PN Vasudevan will also be paring his shareholding, revealed the prospectus.
Out of the INR720 crore the company will receive, it plans to invest INR288 crore in Equitas Micro Finance Limited (EMFL), a similar amount in Equitas Finance Limited (EFL), and INR40 crore in Equitas Housing Finance Limited (EHFL).
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Apart from Equitas Holdings, Ujjivan Financial Services – also operating in the microfinance space – is looking to raise public funds. Bengaluru-based Ujjivan received SEBI approval to bring IPO in February. Ujjivan has a lot in common with Equitas with Sequoia Capital, IFC and CDC being common investors.
Read Also: Thyrocare, Ujjivan get IPO approvals from SEBI
Equitas Holdings – Cross-selling MSE and housing finance
In addition to microfinance, Equitas has operations in vehicle finance, micro and small enterprise (MSE) finance, and housing finance verticals. The last two businesses are largely undertaken as cross-sales to its existing borrowers with good pay back record.
As always, we will come up with our analysis of Equitas Holdings IPO to see if the offer is worth your money or not. Meanwhile, don’t forget to check our page on Equitas Holdings IPO to get all details about the IPO at one place.
Update: Equitas Holdings IPO price band has been fixed at INR109-110 per share.
this is interesting. just wondering why the promoters are cashing out as much as they are. am wondering if they are leaving some cash on the table for IPO investors.
Not sure but think that promoters are required to bring down their stake within six months of getting banking license. This looks a requirement more than anything else.
“our Company proposes to reduce its foreign shareholding to below 49% by undertaking an initial public offering, i.e. this Issue. If, for any reason the foreign shareholding is not reduced to 49% pursuant to this Issue, our Company will take such steps as are necessary, including but not limited to a follow on public issue or private placement to ensure compliance with the requirement prior to commencement of business of the Proposed SFB or such other time as may be allowed by the RBI or applicable law.”
From Equitas’ red herring prospectus. Foreign shareholding is currently at more than 92%.
A look at the financial statements gives an impression that profits are not compromised by revenue growth. My money is on this IPO if everything else with the company is alright.
Investors who lost money in HCG should definitely invest in this IPO to recover losses.