SBFC Finance IPO subscribed 1.91 times on Day 1 led by NII and Retail
Initial Public Offering (IPO) of Delhi-NCR-based SBFC Finance Ltd, is a systemically important, non-deposit taking non-banking finance company (“NBFC-ND-SI”) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals was fully subscribed in a little over four hours as investors from all categories showed a lot interest.
The issue received bids of 25,47,12,900 shares against the offered 13,35,12,817 equity shares, at a price band of ?54-57, according to the data available on the stock exchanges. Overall, the issue was subscribed 1.91 times on the first day of bidding.
Non-Institutional Investors Portion was the most subscribed with 4.12 times, followed by Retail Portion with 2.06 times. Employee Portion was subscribed 1.10 times, whereas, Qualified Institutional Buyer Portion was subscribed 0.03 times. The issue kicked off for subscription on Thursday, August 3, 2023 and will close on Monday, August 7, 2023. A Discount of Rs 2/- per equity share is being offered to Eligible Employees bidding in the Employee Reservation Portion.
A day prior to the opening of the issue, SBFC Finance Ltd had raised Rs 304 crore from anchor investors. Foreign Investors and Domestic Institutions who participated in the anchor were Abu Dhabi Investment Authority, Carmignac Portfolio, Axis Mutual Fund, Birla Mutual Fund, Loomis Sayles, Neuberger Berman among others. The anchor list also saw existing investors ICICI MF, SBI MF, HDFC MF, Amansa, Malabar and Steadview Capital.
Broking houses like SBI Securities, Nirmal Bang, Geojit Financial Services, BP Equities (StoxBox), Ventura Securities, Swastika Finance, LKP Securites, Hensex Securities, and Marwardi Financial Services have given a “SUBSCRIBE” rating to the issue.
Brokerages unanimously recommend subscribing to the SBFC Finance Ltd. IPO. They highlight the company's lower valuation, improved asset quality, and decent business performance as key factors supporting a "Subscribe" rating. Additionally, SBFC's healthy growth, experienced management, strategic loan portfolio diversification, and strong fundamentals contribute to the positive outlook. Despite some risks, including concentration on key customers and fluctuations in collateral prices, the IPO is deemed fairly priced with favorable comparisons to industry peers. The banks's focus on secured business loans to self-employed individuals is seen as a proxy play for a fast-growing segment in lending. Overall, the IPO presents an opportunity for investors to participate in a well-established company with potential for accelerated growth.
ICICI Securities Limited, Axis Capital Limited, and Kotak Mahindra Capital Company Limited are the book running lead manager and KFin Technologies Limited is the Registrar to the Offer. The Equity Shares are proposed to be listed on BSE and NSE.
SBFC Finance is a prominent NBFC in India that concentrates on supporting Micro, Small, and Medium Enterprises (MSMEs). According to a CRISIL Report, the company has achieved exceptional growth in its assets under management (AUM), with a remarkable Compound Annual Growth Rate (CAGR) of 44% during the period from Fiscal 2019 to Fiscal 2023. Additionally, it has experienced a healthy disbursement growth, with a CAGR of 40% between Fiscal 2021 and Fiscal 2023. As of March 31, 2023, the average ticket size (ATS) for its various loan categories stood at ?0.99 million for Secured MSME Loans, ?0.09 million for Loans against Gold, and ?0.69 million for other unsecured loans, based on disbursed amounts. The company's total Asset Under Management as of March 31, 2023, amounted to ?4,942.82 crore, and it had provided loans to 1,02,722 customers by that date.
SBFC Finance primarily caters to customers in tier II and tier III cities, playing a crucial role in fostering entrepreneurship in these regions. It focuses on serving customers who have a strong credit history but may lack formal proof of income documents. By focusing on this niche, the company aims to address the funding needs of deserving individuals and businesses. As of March 31, 2023, SBFC Finance boasts an expansive footprint in 120 cities across 16 Indian states and two union territories, operating through a network of 152 branches. This widespread presence enables the company to reach a diverse customer base and provide financial assistance to those in need throughout the country.
The table below shows subscription data for all the categories of investors:
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