MFI’s Re-evaluate IPO Plans, After Desultory Reaction Of Spandana IPO
Micro- Finance institutions(MFIs), is early waiting for the right time to launch their initial public offering(IPO’s). Fortunately, “this space was created by Spandana Sphoothy which is lacking in Performance”, said MFI’s.
The Hyderabad-based MFI’s Rs 1,200-crore IPO, which closed on August 7, was subscribed just 1.05 times. The main reason for this performance was choppy markets as well as lack of enthusiasm from retail investors, who subscribed to only 10 % of the quota reserved for them. In the Upcoming few quarters, at least two other MFI’s, Muthooth Microfine and Arohan, had planned IPO’s. So now they decided to wait for more clarity. Muthoot Microfine will plan to disclose the IPO depending on the market performance of the upcoming two months. Already, it received approval notification from the SEBI (Securities and Exchange Board Of India) for the IPO and the license is valid for one year. In fact, earlier an IPO planned around January – February, but due to some unfortunate condition of the capital market, it postponed.
“We will go to the IPO in the next two months whenever the market situation improves”, said Sayeed. Arohan has been contemplating an IPO since last year, but as of now, it’s looking to beef up capital through alternative sources.
The team is very excited about filing an application for an IPO by Q4 this year. At present, we are internally doing a rejig of promoter’s holding which is set to increase from nearly 33% to 38% ahead of the IPO. The proceeds will help us expand into new geographies. The market is not buoyant now, and ideally one needs to wait for more stability before going for an IPO,” said Manoj Kumar Nambiar, managing director, Arohan. Currently, MFIs grow in size, beyond Rs 3,000 crore in terms of credit outstanding, many have been seeking to go for an IPO.
Last year, Credit Access Grameen got listed on the exchanges. Apart from this, Satin Creditcare Network is the other listed microfinance company after IndusInd Bank acquired Bharat Financial Inclusion in June. After Bharat Financial, CreditAccess Grameen is the largest MFI, followed by Satin and Arohan, according to data available with Microfinance Institution Network (MFIN).
According to a famous executive in the MFI sectors, several mid-sized MFI’s could also be thinking to tap the capital markets for funding. However, they are searching for other ways to raise capital, qualified institutional investments to adverse market conditions mainly. The MFI industry has been growing rapidly in the last few months. The industry’s gross loan portfolio or GLP stood at Rs 1,87,386 crore at the end of March, up 38 % year-on-year, according to data by MFIN.
Last but not least, several small finance banks (SFBs) would need to mandatorily go for an IPO in the next few months to comply with the Reserve Bank of India’s norms. The norms specify that SFBs must be listed within three years after launching operations. So far, three SFBs have listed on the stock markets – Equitas Financial Holdings, Ujjivan Financial Services, and AU Small Finance Bank. Seven others would need to mandatorily go for an IPO.