Manappuram Finance shares up 5% as Asirvad Microfinance IPO gets Sebi nod

Shares of Manappuram Finance Ltd jumped 5 per cent in Tuesday’s trade as a subsidiary Asirvad Microfinance received nod for a proposed initial public offer (IPO) from Sebi. The unit had filed preliminary IPO papers with the market regulator on October 4, 2023.

Asirvad Microfinance is a non-banking finance company, microfinance institution (MFI) that offers microfinance loans to low-income women. In a release today, Manappuram Finance said Asirvad Microfinance received final observation from the capital markets regulator, to raise funds through the IPO.

Following the development, Manappuram Finance shares climbed 5.36 per cent to hit a high of Rs 207.30 on BSE.

The Asirvad Microfinance IPO would be a fresh issue of up to Rs 1,500 crore, with no offer for sale (OFS) component. Not less than 75 per cent of the IPO would be available for allocation to qualified institutional buyers (QIBs) on a proportionate basis. The portion for non-institutional bidders will be reserved at 15 per cent and retail individual bidders at 10 per cent.

Asirvad Microfinance, in consultation with the lead bankers to the issue, may consider a further issue of equity shares on a private placement for cash consideration aggregating up to Rs 300 crore. If such placement is completed, the fresh issue size will be reduced, Manappuram Finance noted.

As per the DRHP, the net proceeds from the fresh issue would be used to augment the capital base of the company to meet future business requirements and plan to be deployed in FY24.

Asirvad Micro Finance was incorporated in 2008 with two branches in Tamil Nadu. At present. It has presence in 22 states and 4 UTs through a network of 1,684 branches, as on March 31. Asirvad Micro Finance caters to 32.5 lakh active borrowers in the microfinance portfolio that constitutes a majority of its assets under management. It also caters to Loan against Gold and provides MSMEs loans.

It stands to be India’s Largest NBFC MFI considering its geographic reach and third in terms of assets under management and no of clients.

JM Financial Limited, Kotak Mahindra Capital Company Limited, Nomura Financial Advisory and Securities (India) Private Limited, and SBI Capital Markets Limited are the book-running lead managers, and Link Intime India Private Limited is the registrar of the offer. The equity shares are proposed to be listed on the BSE and NSE.