Muthoot Finance's subsidiary files ₹1,300 crore IPO papers with SEBI
What's the story
Belstar Microfinance Ltd, a subsidiary of Muthoot Finance, has filed its initial public offering (IPO) papers with the Securities and Exchange Board of India (SEBI). The Chennai-based firm is planning to raise ₹1,300 crore through this IPO. The proposed IPO includes a fresh issue of equity shares worth ₹1,000 crore, and an offer-for-sale (OFS) amounting to ₹300 crore by investor shareholders, as per the draft red herring prospectus (DRHP).
OFS breakdown
Details of the offer-for-sale in IPO
The offer-for-sale (OFS) in Belstar's IPO includes shares worth ₹175 crore from Danish asset management firm MAJ Invest. Additionally, shares amounting to ₹97 crore from Arum Holdings Ltd, and shares for ₹28 crore from Augusta Investments Zero Pte Ltd are included. MAJ Invest first invested in Belstar Microfinance in 2018, and made another investment earlier this year. Currently, Muthoot Finance owns just over two-thirds of Belstar Microfinance.
Fund utilization
Allocation of IPO proceeds by Belstar Microfinance
The proceeds from the fresh issue, amounting to ₹760 crore, will be utilized to meet future capital requirements for onward lending. The remaining funds will be allocated for general corporate purposes. As a Non-Banking Finance Company - Micro Finance Institution (NBFC-MFI), Belstar offers various loan products including consumer goods loans, festival loans, education loans, and emergency loans.
Overview
Business model and financial performance
Belstar primarily operates using the 'self-help group' (SHG) model, which constitutes 57% of its total loan portfolio as of December 31, 2023. In the nine months ending December 2023, the firm reported a profit of ₹235 crore on revenue of ₹1,283 crore. ICICI Securities, Axis Capital, HDFC Bank, and SBI Capital Markets have been appointed as book-running lead managers to oversee the company's public issue.