Bengaluru-based microfinance lender Ujjivan Financial Services Private Limited has hired investment banks to initiate its INR15 billion initial public offer (IPO). The firm was granted provisional license by the Reserve Bank of India (RBI) earlier this year to convert itself into a small finance bank. Ujjivan is one of the 10 companies that won RBI’s approval for setting up small finance banks.
Shareholding Pattern
As on 31 March 2015, 88.69% of Ujjivan Financial Services’ equity was with foreign shareholders. The lender has to bring it down to 49% to comply with RBI’s rules for becoming a small finance bank. The IPO is meant to raise funds and give foreign investors with an opportunity to sell their stakes.
Its investors include Sequoia Capital, CX Partners, International Finance Corporation (IFC) and UK’s development finance institution CDC. CDC is the biggest shareholder in Ujjivan with 12.69%, while IFC and CX Partners own 11.84% and 10.69%, respectively. Early this year, the company had raised INR6 billion from its investors.
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Company Background
The microfinance lending company was founded by Samit Ghosh in 2006. Ghosh was awarded the Entrepreneur of the Year 2015 by The Forbes India Leadership Awards (FILA) for setting up an organization to give financial access urban and semi-urban Indians.
Ujjivan has a network of 423 branches spread across India. The company plans to adopt mobile route and offer mobile wallets to its customers. It serves 2.7 million customers in India and has started to scale up its operations. It plans to recruit 3000 personnel in various segments.
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Company Financials
For FY2014-15, Ujjivan’s net profit rose 38% from INR550 million to INR750 million and it disbursed loans worth INR43.28 billion with repayment rate of around 99.8%.
| Ujjivan’s Financial Information as on March2015 (in millions) | ||
| Particulars | FY2014 | FY2015 |
| Total Income | 3,576 | 6,118 |
| Profit/Loss before Tax | 838 | 1,145 |
| Profit | 550 | 757 |
Other companies that had been granted license by RBI include Equitas, Janalakshmi Financial Services, RGVN (North East) Microfinance, Suryoday Micro Finance, ESAF Microfinance and Investments, Utkarsh Micro Finance, Disha Microfin, Capital Local Area Bank and Au Financiers. Out of these, Chennai-based microfinance lender Equitas Holdings Limited is also an IPO candidate and plans to raise INR20 billion through the offer. Such microfinance companies will attract fancy of prospective investors and will be accepted readily by public market as they have gone through thorough evaluation by regulator for granting license.
