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PE-backed MAS Financial raises $20.9 mn from anchor investors

05 October, 2017

Ahmedabad-based non-banking financial company MAS Financial Services Ltd on Thursday raised Rs 135.91 crore ($20.9 million) from anchor investors including funds of Nomura, JP Morgan and Wasatch Advisors ahead of its public issue beginning Friday.

MAS—which counts Sarva Capital as its private equity backer along with German and Dutch development finance institutions (DFIs) DEG and FMO—allotted 2.96 million shares at the upper end of Rs 456-459 price band, the company said in a stock exchange filing.

Credit Suisse also came in as an anchor investor. Through its Singapore investment arm, it acquired shares worth Rs 18.91 crore.

The Nomura Trust and Banking Co Ltd as trustee of NITM Asia Open Fund acquired shares worth Rs 9 crore. JP Morgan and Wasatch each acquired shares worth Rs 6.75 crore.

The anchor allotment also elicited participation from a handful of Indian asset managers such as HDFC Mutual Fund, ICICI Prudential AMC, SBI Mutual Fund, Reliance Nippon AMC, Axis Mutual Fund, Birla Sun Life Mutual Fund and UTI Mutual Fund, among others.

Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares and support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.

The company is seeking a valuation of Rs 2,525.64 ($384 million) through the IPO that will result in roughly 18.5% stake dilution on post-issue basis.

The IPO is worth Rs 460.04 crore ($70 million). The company is issuing fresh shares worth Rs 233 crore besides a secondary market sale of shares worth Rs 227.04 crore by existing investors.

The firm had filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on 27 March. It received the market regulator’s nod on 26 May.

VCCircle was first to report in September 2016 that MAS Financial was finalising plans to take the IPO route, following in the footsteps of several banking, financial services and insurance companies that have either gone public or firmed up IPO plans in the last one year.

MAS Financial had earlier proposed to sell fresh shares worth Rs 307.4 crore ($47.2 million) and a secondary sale of shares worth Rs 242.6 crore. The company, however, raised Rs 135 crore via a private placement in a pre-IPO round.

The firm will look to deploy the capital raised over FY2017-18 and FY2016-19. The IPO will also help it augment its capital base to meet requirements under capital adequacy norms.

Under the Reserve Bank of India’s (RBI) capital adequacy regulations, NBFCs must have a capital-to-risk assets ratio (CRAR) of 15%.

The company—which was formerly known as M/S Marketing & Allied Services and is led by Kamlesh Gandhi and Mukesh Gandhi—was engaged in consumer durable financing initially. It registered as an NBFC in 1995.

It provides corporate loans to NBFC-MFIs and other NBFCs engaged in retail finance, small ticket business loans, small commercial vehicle loans, two-wheeler loans and machinery finance. Most of its branches are located in Gujarat, Rajasthan and Maharashtra. It also has presence in Tamil Nadu, Madhya Pradesh, Karnataka and New Delhi, primarily to tap the commercial vehicle market.

The company had reported assets under management of Rs 3451 crore as of 30 June 2017. In FY2016-17, the company reported revenues of Rs 364 crore with a profit after tax of Rs 69 crore.

In the past, the company raised Rs 6.5 crore from Bellwether Micro Fund. In 2008, it raised Rs 40 crore from ICICI Ventures through a mezzanine funding deal in the form of redeemable preference shares besides the funds raised from DEG and FMO.

In 2012, it also raised $12 million from IFC through compulsorily convertible preference shares (CCPS).

MAS Financial will join housing finance company PNB Housing Finance Ltd, small finance bank UjjivanFinancial Services Ltd, insurance firm ICICI Prudential Life and baking firm RBL Bank Ltd that successfully floated IPOs in the past one year.

Motilal Oswal Investment Advisors Pvt Ltd is the sole merchant banker managing MAS Financial’s IPO.

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PE-backed MAS Financial raises $20.9 mn from anchor investors

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