Mumbai-based SBFC Finance Limited a non-deposit-taking non-banking finance company ("NBFC-ND-SI") offering Secured MSME Loans and Loans against Gold, to entrepreneurs, small business owners, self-employed individuals, salaried and working-class individuals has filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India to raise Rs 1600 crore via initial public offering (IPO).
The public issue consists of a fresh issue of equity shares worth up to Rs 750 crore and an offer-for-sale (OFS) of up to Rs 850 crore by Promoter and selling shareholders, which comprises up to Rs 398.19 crore by Arpwood Partners Investment Advisors LLP, Rs 97.73 crore by Arpwood Capital Private Limited, Rs 79.08 crore by Eight45 Services LLP, and Rs 275 crore by SBFC Holdings Pte. Ltd. The offer also includes a reservation for subscription by eligible employees.
The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders.
The company in consultation with merchant bankers on the issue may consider a private placement, aggregating up to Rs. 150 crores. If such placement is completed, the fresh issue size will be reduced.
The proceeds from the fresh issuance worth Rs 750 crores will be used towards augmentation of its capital base to meet future capital requirements arising out of the growth of its business and assets ("Object").
SBFC Finance Limited has one of the highest assets under management ("AUM") growth rates among India's MSME-focused NBFCs, with a CAGR of 40% between Fiscal 2019 and Fiscal 2022 and along with strong disbursement growth, between Fiscal 2019 and Fiscal 2022, with a CAGR of 39%, as a result, it focuses on disbursing loans with a ticket size in the range of Rs 0.50 million to Rs 3.00 million and as of June 30, 2022, 84.73% of its AUM had ticket sizes in this range.
The Mumbai Headquartered, non-banking finance company is backed by marquee institutional investors such as the Clermont Group, Arpwood Group, and Malabar Group.
It had given loans to 72,816 and 80,073 customers as of March 31, 2022, and June 30, 2022, respectively. It provided services to clients in tier II and tier III cities, promoting entrepreneurship in these areas while concentrating on clients who may not have official proof of income documentation but have solid credit histories.
As of June 30, 2022, it has an expansive footprint in 104 cities, spanning 16 Indian states and two union territories, with 135 branches. Its AUM has grown at a CAGR of 39.17% from Rs 1,648.21 crore as of March 31, 2020, to Rs 3,192.18 crore as of March 31, 2022, and was Rs 3,628.26 crore as of June 30, 2022, and spread across all of India, with 31.81% in the northern states of Chandigarh, Delhi, Haryana, Punjab, Rajasthan, Uttar Pradesh, and Uttarakhand, 37.72% in the southern states of Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, and Puducherry, and 30.46% in the western and eastern states of Gujarat, Madhya Pradesh, Maharashtra, West Bengal, Assam, and Bihar collectively.
As of June 30, 2022, it had 1,594 employees and a direct sourcing approach that relies on walk-ins, repeat business from clients, and branch-led local marketing initiatives. As of March 31, 2022, and as of June 30, 2022, its Gross Non-Performing Assets ratio was 2.74% and 2.68%, respectively, and the Net NPA ratio was 1.63% and 1.57%, respectively.
In the age of Phygital, it introduced 'Leviosa', a loan origination platform capable of on-boarding and disbursing loans and for Loan against Gold portfolio, it has set up a dedicated 'Gold Genie' sales application, enabling gold loan disbursal at a customer's home.
The organization is chaired by Mr. Neeraj Swaroop, Chairperson, and Independent Director. The key management team members include Mr. Aseem Dhru, Managing Director and Chief Executive Officer, and Mr. Mahesh Dayani, Chief Business Officer, among others.
SBFC Finance's revenue from operations stood at Rs 529.05 crore in Fiscal 2022 vs 507.10 in FY21. Fees and commission income has improved to Rs 27.24 crore from Rs 24.15 cr. The finance cost of the company has come down to Rs 220.62 crore from 238.46 crore. Profit after tax for FY22 stood at Rs 64.52 crore, and three months ended June 30, 2022 is Rs 32.06 crore. Total Net Loan Book stood at Rs 2,963.04 crore for FY22 against Rs 2,044.92 crore in FY21. The total Net Loan Book for the three months ended June 30, 2022 stood at Rs 3,335.86 crore. Gross NPA to Gross Loan Book has improved to 2.74% in FY22 from 3.16% in FY21 and 2.68% for the three months ended June 30, 2022. Gross NPA to AUM improved to 2.60% in FY22 vs 3.00% in FY21 and 2.52% for the three months ended June 30, 2022.
ICICI Securities Limited, Axis Capital Limited, and Kotak Mahindra Capital Company Limited are the book-running lead managers and KFin Technologies Limited is the registrar of the offer. The equity shares are proposed to be listed on BSE and NSE.