Asirvad Microfinance, a subsidiary of the listed non-banking financial company (NBFC) Manappuram Finance, is gearing up for an initial public offer (IPO) to raise around Rs 1,500 crore. The firm has selected three investment banks, JM Financial, Nomura, and Kotak Mahindra Capital, to manage the IPO. Asirvad Microfinance’s decision to go public comes as the regulatory environment for the microfinance segment becomes more favorable, coupled with positive analyst outlook for the sector and the buoyant capital markets. This move underscores the company’s ambitions for expansion and growth while riding on the optimism in the microfinance industry.
Trigger for IPO Plans:
The new regulatory environment for the microfinance sector, along with positive market sentiment and the successful debut of Uttkarsh Small Finance Bank on the stock exchanges, have catalyzed Asirvad Microfinance’s IPO plans. The company aims to file the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) by September.
Pure Primary Issuance of Shares:
The proposed IPO is likely to be a pure primary issuance of shares. Currently, the planned size is around Rs 1,500 crore, but this may change and potentially increase later if needed. Asirvad Microfinance is mainly owned by its parent company, with no significant private equity investors involved, indicating a strong commitment to fuel its growth independently.
Financial Snapshot of Asirvad Microfinance:
According to its FY22-23 annual report, Asirvad Microfinance boasts an impressive assets under management (AUM) of Rs 10,040.89 crore and a profit after tax (PAT) of Rs 218.13 crore, compared to Rs 15 crore in the previous fiscal year. The firm serves 3.2 million borrowers, employs 15,784 staff members, and has disbursed a total of Rs 19,248 crore in loans. It has a wide presence across India with 1,684 branches spread across 391 districts in 22 states and 3 union territories.
Focused on Women Empowerment and Financial Inclusion:
Asirvad Microfinance targets women from poor and lower-income households, providing them with microfinance loans, MSME loans, and gold loans. Its product offerings cater to the unbanked sections of society, empowering them financially. The company’s presence in 22 states and 3 union territories highlights its commitment to expanding financial inclusion across India.
Sector Revival and Regulatory Support:
As the microfinance sector rebounds from the challenges of the past two years, Asirvad Microfinance’s Chairman, VP Nandakumar, emphasized the confidence in the NBFC-MFI business model. The Reserve Bank of India’s harmonized regulations for microfinance as an asset class have boosted the industry’s prospects. The removal of interest rate ceilings and greater flexibility in managing risks are seen as major positives for the sector, paving the way for increased investment and credit extension to the unbanked segments of society.
Conclusion:
Asirvad Microfinance’s decision to pursue a Rs 1,500-crore IPO reflects its aspirations for growth and expansion amidst favorable market conditions. With the support of three renowned investment banks, the company aims to capitalize on the renewed optimism in the microfinance sector. As India’s microfinance landscape evolves and regulatory support strengthens, Asirvad Microfinance’s IPO may mark a significant milestone in its journey toward achieving financial inclusion and empowering women entrepreneurs. Investors and stakeholders eagerly await the IPO’s success, anticipating that it will unlock new opportunities for the company and contribute to the larger vision of inclusive economic growth.
