Muthoot Finance on May 5 informed the exchanges that its subsidiary Belstar Microfinance has filed the draft red herring prospectus for a proposed ₹1,300 crore initial public offer with the Securities and Exchange Board of India (SEBI).
The issue will comprise of a fresh issue of equity shares of face value of ₹10 each for an amount aggregating up to ₹1,000 crore, and an offer for sale of equity shares totaling to ₹300 crore by some existing non-promoter shareholders, per Muthoot’s release.
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Muthoot Finance had acquired a 53% stake in Belstar in 2017 as part of its diversification strategy. Subsequently, it increased its stake in the microfinance lender and currently holds over 66.13%.
Danish asset management firm MAJ Invest aims to offload ₹175 crore worth of shares through the OFS. The firm, which had invested in the non-banking lender in 2018 and 2022, currently holds around 8.74% in Belstar.
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Arum Holdings, which has 13.94%, and Augusta Investments Zero Pte, that owns 4% stake are among other investors who will look to sell shares worth ₹97 crore and ₹28 crore, respectively.
Belstar plans to use ₹760 crore of the net proceeds from the fresh issue to meet future capital requirements towards onward lending. The balance will be used for general corporate purposes, the company said in the draft papers.
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The company’s lending model primarily centers around the ‘self-help group’ (SHG), and accounted for 57% of its total loan portfolio as of December 31, 2023.
For the April-December 2023 period, the Chennai-based microfinance firm posted a profit of ₹235 crore with a revenue of ₹1,283 crore.
ICICI Securities, Axis Capital, HDFC Bank and SBI Capital Markets have been appointed as book running lead managers to manage the company’s public issue.
The microfinance industry has recorded healthy growth in the past few years and is expected to see strong growth on back of government’s continued focus on strengthening the rural financial ecosystem, strong credit demand, and higher ticket sized loans disbursed by microfinance lenders, per a CRISIL Report.
With PTI inputs
