Bengaluru-based microfinance firm Ujjivan Financial Services Ltd raised Rs 265 crore ($40 million) from a bunch of anchor investors ahead of floating its initial public offer (IPO). The firm sold shares to a group of investors, including Edelweiss-controlled hedge fund Forefront Capital at the upper end of the Rs 207-210 price band.
The firm also roped in a number of mutual fund and asset management arms of insurers as anchor investors.
Ujjivan becomes the second microfinance institution, after Equitas, with in-principle approval to launch a small finance bank to go public.
The in-principle approval from the Reserve Bank of India requires small finance banks to pare their foreign shareholding to 49 per cent. Foreign investors owned almost 89 per cent of the company before the pre-IPO placement and currently hold about 77 per cent. After the IPO, their stake will fall to 45 per cent.
Equitas Holdings Ltd, the holding company for the fifth-largest microlender in the country that completed its IPO early this month, saw its share price soar on market debut last week.
Ujjivan filed its draft papers with the Securities and Exchange Board of India (SEBI) in January and the capital markets regulator’s approval last month.
It had earlier planned to mop up Rs 650 crore through the fresh share issue in the IPO but it trimmed the targeted amount after raising almost Rs 292 crore via a pre-IPO placement, according to its red herring prospectus. The company plans to use proceeds from the fresh share issue to augment its capital base.
Ujjivan is seeking a valuation of as much as Rs 2,500 crore ($375 million) in the IPO that opens on April 28.
The company aims to raise Rs 358 crore by selling fresh shares while the offer for sale from overseas investors, who are exiting or paring their stakes in the company, will be worth about Rs 527 crore.
The offer for sale will include share sales from investors, including Elevar Equity, International Finance Corporation, Sarva Capital and Women’s World Banking Capital Partners.
Overall, Ujjivan will be the fourth microlender to be listed on the stock exchanges; SKS Microfinance made its debut in 2010. Satin Creditcare and Equitas are the other two existing mid-large sized MFIs on the bourses.
Kotak Mahindra Capital, Axis Capital, ICICI Securities and IIFL Holdings are the lead managers to the Ujjivan IPO.