SBFC Finance refiles DRHP after cutting IPO size with SEBI

SBFC Finance Ltd
March 23, 2023

Mumbai- grounded SBFC Finance Limited, a non-deposit-taking non-banking finance company (NBFC- ND-SI) has refiled draft red herring prospectus (DRHP) with the request controller Securities and Exchange Board of India (SEBI) and reduced its original Public Offering (IPO) size to Rs 1200 crore from Rs 1600 crore planned before. The original share trade comprises fresh allocation of equity shares worth Rs 750 crore and an Offer for trade (OFS) of Rs 450 crore. Moneycontrol was the first to report the table plans of Arpwood mates and Clermont Group- backed SBFC Finance on June 1, 2021.

The company had filed primary IPO papers with SEBI in November last time. The OFS comprises up to Rs207.75 crore by Arpwood mates Investment counsels LLP, Rs50.99 crore by Arpwood Capital Private Limited, Rs41.26 crore by Eight45 Services LLP, and Rs150 crore by SBFC effects Pte. Ltd. The offer also includes a reservation for subscription by eligible workers.

The offer is being made through the Book Building Process, wherein not further than 50 percent of the offer shall be available for allocation to good Institutional Buyers, not lower than 15 percent of the offer shall be available for allocation to Non-Institutional stab and not lower than 35 percent of the offer shall be available for allocation to Retail Individual stab.

The company in discussion with trafficker bankers may consider issuing equity shares on a private placement base, adding up to Rs. 150crore.However, the fresh issue size will be reduced, if similar Pre-IPO placement is completed. The proceeds from the fresh allocation worth Rs 750 crore will be used towards addition of its capital base to meet unborn capital conditions. As of December 31, 2022 the company’s CRAR stood at33.23 percent.

As per the CRISIL report stated in the DRHP, the company amongst all MSME- concentrated NBFCs has had the loftiest means under operation (AUM) growth. Between FY2019 and FY2022 its growth was at a CAGR of 40 percent. It’s the smallest proportion of AUM arising out from the largest state in its portfolio and has maintained so despite its growth since its commencement in 2017.

SBFC Finance Ltd

The lender provides fiscal backing to entrepreneurs, small business possessors, and tone- employed and salaried individualities. Up to 81.57 percent of its MSME loan guests have a CIBIL score above 700 at the time of fabrication. Backed by marquee institutional investors, SBFC Finance focuses on outlaying loans with a ticket size in the range of Rs0.50 million to Rs3.00 million and as of December 31, 2022, 86.48 percent of its AUM had ticket sizes in this range. It has a 137- branch footmark in 105 metropolises across 16 countries and two union homes and has grown from 40,432 guests in FY20 to 94,997 guests as on December 31, 2022.

The association is chaired by Neeraj Swaroop, Chairperson, and Independent Director. The crucial operation platoon members include Aseem Dhru, Managing Director and Chief Executive Officer, and Mahesh Dayani, Chief Business Officer, amongst others.

SBFC’s profit from operations stood at Rs529.05 crore in financial 2022 against Rs507.10 in FY21. It reported Rs525.25 crore for the nine months ended December 31, 2022. It has also seen an increase in its profitability due to a reduction in finance costs, and an increase in freights and commission from Rs64.52 crore in FY22 to Rs107.03 crore as on December 31, 2022. In December 2022, SBFC incorporated an attachment, SBFC Home Finance Private Limited, through which it intends to commence its casing finance business fastening on affordable casing loans to individual borrowers from the EWS, LIG, and middle- income parts.

As of March 31, 2022 the Crisil report in its DRHP states that lower than 15 percent of the approximate 70 million MSMEs in India have access to formal credit stoked by lower credit penetration in league 2 and league 3 metropolises. ICICI Securities Limited, Axis Capital Limited, and Kotak Mahindra Capital Company Limited are the book- running lead directors and KFin Technologies Limited is the register of the offer. The equity shares are proposed to be listed on BSE and NSE.