Fusion Microfinance Share Price:
Fusion Microfinance, which is backed by PE firm Warburg Pincus, filed for its draft red herring prospectus in mid-August 2021. It has just received approval from SEBI and can now proceed to file the RHP with RoC and complete other formalities to go ahead with the IPO. The share price of Fusion Micro Finance is 403.00.
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Seven Things to Know About Fusion Microfinance IPO:
1) Fusion Microfinance extends small ticket loans to borrowers in rural and semi-urban areas and largely works with the unbanked section of the population. It operates in the same industry segment as other major players in India such as Ujjivan Small Finance Bank, Equitas SFB, Suryoday Small Finance Bank, Bandhan Bank, etc.
2) Fusion Microfinance had initial backing from Creation Investment and Honey Rose Investment, an arm of global PE giant Warburg Pincus. Fusion Microfinance’s IPO will consist of a fresh issue of ₹600 crore and an offer for the sale of 2,19,66,841 equity shares. The final size of the offer will depend on the final price band of the IPO.
3) Out of the 2.197 crore shares that are being offered as part of the FS, two promoters Devesh Sachdev and Mini Sachdev will offer 13 lakh shares and 2 lakh shares respectively. Early investors Creation Investment will offer 40 lakh shares while Honey Rose Investment will offer 63.21 lakh shares in the OFS. Other selling shareholders in the OFS include Oikocredit, Ecumenical Development, and Global Financial Inclusion Fund.
4) The promoter group of Fusion Microfinance holds 85.5% of the company while the other two selling shareholders jointly hold 12.03% of the company. Fusion Microfinance may also consider a pre-IPO placement of ₹120 crores, in which the size of the IPO will be reduced proportionately. Anchor placement will be taken closer to the date of the IPO.
5) For any microfinance institution, asset quality cycles are quite common as observed in many cases. Hence sound capital adequacy is essential for these microfinance players. Rupee. 600 crore new issue will be used to enhance the capital base of the company and enhance its capital comfort to expand its book.
6) For FY21, Fusion Microfinance reported a total revenue of ₹873 crore and a net profit of ₹43.9 crore. Profits fell sharply in FY21 over FY20 due to asset quality stress created by the pandemic, which impacted loan servicing capacity for many customers.
7) The issue will be managed by ICICI Securities, CLSA India, IIFL Securities, and JM Financial, who will be the Book Running Lead Managers or BRLMs to the issue. Retail allocation in IPO will be 35% and QIB will be 50%.
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