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IndoStar Capital pares gains after listing at 5% premium
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Mumbai-based IndoStar Capital Finance Ltd made a positive start on the stock exchanges on Monday, with its shares listing at a 5% premium to the initial public offering (IPO) price, before paring gains on profit-taking.

Shares of the Everstone Capital-backed non-banking financial company (NBFC) began trading on the BSE at Rs 600 compared with the IPO price of Rs 572, stock-exchange data showed.

The stock oscillated between Rs 606.30 and Rs 578.50, before closing at Rs 585.05, up 2.4% from the IPO price. The company now commands a market value of Rs 5,336 crore.

The BSE’s benchmark Sensex declined 0.67% on Monday.

IndoStar is the 14th company to list on the main board of the bourses in 2018. Seven of the previous 13 companies had gained on debut.

The positive listing follows an IPO that received a strong response from investors. The IPO was subscribed 6.5 times.

IndoStar was seeking Rs 5,213 crore in valuation through the IPO. The company issued fresh shares worth Rs 700 crore, besides conducting a sale of 20 million shares by the promoter and other shareholders. The sellers made decent returns on their partial exits.

The company had filed its IPO proposal with the Securities and Exchange Board of India on 9 February. It received the regulatory nod to float its IPO on 3 April.

JM Financial, Kotak Mahindra Capital, Morgan Stanley India, Motilal Oswal Investment Advisors, and Nomura Financial Advisory and Securities India had been appointed as merchant bankers for the issue.

IndoStar had, in 2016, deferred its plan to go public as it was looking to expand its consumer lending portfolio through acquisitions.

VCCircle had first reported in November 2017 that the company was reviving plans to go public ahead of a proposed acquisition of ICICI Home Finance. The deal to buy ICICI Bank’s mortgage unit was called off. IndoStar Capital’s chief executive R Sridhar later explained that there was a “problem of alignment of objectives”.

IndoStar Capital

The firm was established in 2009 as RV Vyapaar Pvt. Ltd. It was renamed as IndoStar in 2014. The company was 90.74% owned by IndoStar Capital Mauritius as of 31 March 2017, according to a June report by Care Ratings.

Everstone Capital holds a 49.4% stake in IndoStar Capital Mauritius, while Goldman Sachs owns 18.8%. Its other major shareholders are ACIP Investments with a 16.4% stake, Baer Capital Partners with 10.8% and CDIB Capital International—the private equity arm of China Development Financial—with 4.7%. One of its previous investors was Ashmore Group Plc., which sold its stake to Everstone and ACIP in 2014-15.

IndoStar had assets of Rs 5,222 crore as of March-end 2017. It is building on its next set of growth vectors, utilising its structured debt expertise to serve smaller businesses, according to the company’s website.

The company operates four principal lines of business, namely, corporate lending, small and medium enterprise (SME) lending, vehicle financing and housing financing.

Around 86% of its portfolio was in wholesale lending, divided almost equally between real estate and non-real estate segments. The other category includes loans against property to small and medium enterprises.

Corporate lending accounted for 78.6% of its total credit exposure for the six months ended September 2017, while SME lending accounted for 21.4% for the same period.

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