SBFC Finance IPO to open on August 3, to raise Rs 1,025 crore

SBFC Finance IPO comprises a fresh issuance of shares worth Rs 600 crore and an offer for sale of Rs 425 crore by promoters

Singapore-based private equity firm Clermont Group-backed non-banking finance company SBFC Finance has decided to launch its initial public offering (IPO) for subscription on August 3. The company plans to raise Rs 1,025 crore from the offering.

The offer comprises a fresh issuance of shares worth Rs 600 crore and an offer for sale (OFS) of Rs 425 crore by the promoters. Arpwood Partners Investment Advisors LLP, Arpwood Capital and Eight45 Services LLP are selling shares in the issue.

The public issue will close on August 7. The anchor book will open for bidding for a day on August 2.

The price band for the offer will be announced by the company in the coming days.

SBFC Finance, which has reserved Rs 10.25 crore worth of shares for its employees in the IPO, has already mopped up Rs 150 crore via private placement of 2.72 crore equity shares before filing the red herring prospectus with the Registrar of Companies. As a result, the fresh issue size has been reduced by Rs 150 crore to Rs 600 crore.

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Proceeds from the IPO will be utilised for augmenting the capital base to meet future capital requirements arising out of the growth of business and assets, the company said.

SBFC Holdings Pte Ltd, Clermont Financial Pte Ltd, Arpwood Capital, Arpwood Partners Investment Advisors LLP and Eight45 Services LLP are the corporate promoters of the company and hold a combined 80.48 percent stake in the company.

The MSME-focused NBFC recorded Rs 149.74 crore profit in FY23, which is a significant growth from Rs 64.8 crore in the previous year. Revenue from operations during the year also grew 38.5 percent to Rs 732.8 crore compared to the previous year.

Net interest income, the difference between the interest earned from loans and the interest paid on interest-bearing liabilities, increased by 49 percent to Rs 379 crore during the financial year gone by, against Rs 254 crore in the previous year, with net interest margin falling 7 bps YoY to 9.32 percent.

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Its asset quality has consistently improved year-after-year, with gross non-performing assets (NPA) as a percentage of gross advances reducing to 2.43 percent in FY23 from 2.74 percent in FY22. Its net NPA dropped to 1.41 percent from 1.63 percent during the same period, while the provision coverage ratio improved to 42.04 percent from 40.44 percent during the same period.

The NBFC's assets under management (AUM) stood at Rs 4,942.8 crore as of March FY23, registering a growth of nearly 55 percent compared to Rs 3,192.2 crore in the previous financial year.

The non-banking finance company had filed a draft red herring prospectus with the capital market regulator Sebi for the second time in March 2023, with a reduced IPO size of Rs 1,200 crore, which got approved last month.

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Earlier it had filed IPO papers for the first time in November 2022, to mop up Rs 1,600 crore comprising a fresh issue of Rs 750 crore and an offer for sale of Rs 850 crore.

ICICI Securities, Axis Capital and Kotak Mahindra Capital are the merchant bankers for the issue, while KFin Technologies is the registrar for the offer.