Chennai-based Equitas Holdings Ltd, the holding firm for the fifth-largest microlender in the country, has raised Rs 653 crore from a bunch of 16 anchor investors ahead of its initial public offer (IPO) that opens on April 5.
Equitas said it has allotted 5.93 crore shares at Rs 110 each, the upper end of the IPO price band. Anchor investors include Wipro chairman Azim Premji’s private investment arm PremjiInvest besides a host of mutual funds and insurance firms, including Franklin Templeton MF, Birla Sun Life Trustee Co, SBI MF, UTI MF, ICICI Prudential MF, Kotak Mahindra MF, HDFC Standard Life Insurance, Birla Sun Life Insurance, Sundaram MF, Tata AIA Life Insurance, Reliance Life Insurance and Ambit Alpha Fund.
Anchor allotment represents sale of shares to institutional investors on the eve of opening an IPO. The issue size gets reduced to the extent of the anchor allotment.
Equitas had earlier the terms of its IPO even as it seeks to become the second microlender to go public after SKS Microfinance listed on the bourses in 2010.
The firm is looking to raise as much as Rs 720 crore through a fresh issue of shares besides an offer for sale by a bunch of its private investors and founder PN Vasudevan. In its draft prospectus filed with capital market regulator SEBI last October, Equitas had sought to raise up to Rs 600 crore.
Equitas that opens its issue on April 5 also disclosed that its offer for sale size has also increased as two of its private investors are looking to sell more shares than they planned initially. World Bank’s private investment arm IFC and Helion Venture Partners have pushed up the quantum of shares they intend to sell in the IPO, even as they would retain a stake in the firm.
The firm counts around a dozen venture capital, private equity and development financial institutions as private investors. Around 93 per cent stake of the firm is held by foreign investors, including overseas incorporated bodies.
IFC, CDC and India Financial Inclusion Fund are the top three shareholders of the firm. In the proposed offer for sale, some like Sequoia Capital, WestBridge, Aavishkaar, Lumen, Aquarius and MVH are exiting their investments. IFC, FMO, Helion, Creation Investments, Sarva Capital are part exiting while India Financial Inclusion Fund is offering to sell bulk of its holding.
Of the total money to be raised through a fresh issue of shares, the company plans to use over Rs 600 crore towards investment in subsidiaries to augment their capital base.
Incorporated in 2007, Equitas is a diversified financial services provider focused on individuals and micro and small enterprises (MSEs) that are underserved by formal financing channels.
Equitas is essentially a holding company and operates through its three subsidiaries that are engaged in microfinance lending, vehicle and MSEs lending, and housing finance.
Edelweiss, ICICI Securities, Axis Capital and HSBC are the merchant bankers for the IPO.
Microfinance in public market
Bengaluru-based MFI Ujjivan Financial Services Ltd had also filed its draft red herring prospectus with SEBI for its public issue. It also received SEBI nod for the issue a month ago.
The IPO of SKS Microfinance, once the largest and now the second-largest MFI in the country by loan book, had attracted widespread attention. Its share price shot up soon after listing, but regulatory muddle surrounding its once key market Andhra Pradesh hurt the firm’s business.
Although SKS has restructured significantly since then to once again emerge as one of the top MFIs by size, its share price is now just about half its IPO price and a fraction of its all-time high.
Equitas, the fifth-largest MFI behind Janalakshmi, SKS, Ujjivan and Satin, is one of the eight microfinance firms to secure a small finance bank licence last year. It would be the first among its small finance bank peers to tap the primary market to raise funds and reduce foreign shareholding to the 49 per cent limit set by the Reserve Bank of India.