The IPO consists of a fresh issue of Rs 750 crore and an offer for sale (OFS) totaling up to 7.03 crore equity shares by the promoter and other selling shareholders.
Under the OFS, Federal Bank will offload 1.64 crore equity shares, while True North Fund VI LLP will offload 5.38 crore shares.
Fedbank Financial is one of the five private bank-promoted NBFCs in India, focusing on serving the MSMEs and emerging self-employed individuals sector.
The company intends to use the net proceeds from the fresh issue to strengthen its Tier-I capital base, meet future capital requirements arising from business and asset growth, and cover offer expenses.
In consultation with the book-running lead managers, the company and selling shareholders may consider a private placement of specified securities or another route, up to 20% of the fresh issue, for cash consideration totaling up to Rs 150 crore, before filing the draft papers.
If such a pre-IPO placement occurs, the offer size will be reduced.
Fedbank Financial is the fastest-growing gold loan NBFC among its peers in India. It has the second lowest cost of borrowing among MSMEs, gold loan, and MSME and gold loan peer set in India in FY23.
As of March 2023, the company achieved the third fastest AUM growth among NBFCs in India, with a three-year CAGR of 33% between FY20-23. Approximately 86% of the total loan assets are secured against tangible assets, such as gold or a customer’s property.
Housing finance and gold loans account for 46% and 12% of the retail loans industry in India in FY23, respectively. Crisil MI&A estimates the outstanding value of loans provided by organized financiers (banks and NBFCs) to be Rs 6.1 trillion, with NBFCs comprising one-quarter of the market.
For the fiscal year ending March 2023, revenue from operations was Rs 1,178.8 crore, while net profit stood at Rs 1,801 crore in the same period.
ICICI Securities, BNP Paribas, Equirus Capital, and JM Financial will serve as the book-running lead managers for the issue.