SBFC Finance Ltd, a prominent non-banking finance company, is all set to open its initial public offering (IPO) for subscription on August 3, offering a window of opportunity to investors to be part of its growth journey. With a price band set between ₹54 to ₹57 per equity share, the IPO comprises a fresh issuance of equity shares worth ₹600 crore and an offer for sale (OFS) of ₹425 crore. The total offer size of the SBFC Finance IPO now stands at ₹1,025 crore. The IPO has garnered significant interest from investors, evident from the grey market premium of +38 as of the latest update.
SBFC Finance’s Growth Trajectory:
SBFC Finance specializes in providing loans to entrepreneurs, self-employed individuals, small business owners, and salaried employees, catering to diverse segments of the population. The company has witnessed substantial growth over the years, evident from its financial performance. In the nine months ending in December, SBFC Finance recorded sales of ₹525 crore and a profit of ₹107 crore, showcasing its robust financial position.
As of December 2022, SBFC Finance had an impressive network of 137 branches spread across 105 locations, serving a substantial customer base of 94,997. This growth in the customer base, which has nearly doubled from 40,432 in FY20, highlights the company’s increasing popularity and trust among borrowers.
The Purpose of the IPO:
The IPO comes with a clear purpose – to meet future capital requirements and support the expansion of SBFC Finance’s operations and assets. The net proceeds from the IPO will be utilized for onward lending under the company’s lending verticals, including MSME loans and loans against gold. Additionally, the funds will be allocated for ensuring compliance with regulatory requirements, funding growth opportunities, and covering operating expenses.
Investor Participation and Allotment:
The SBFC Finance IPO has reserved not more than 50% of the shares for Qualified Institutional Buyers (QIBs), at least 15% for Non-Institutional Investors (NIIs), and at least 35% for Retail Investors. The offering also reserves up to ₹102.50 million in equity shares for employees, fostering a sense of inclusivity for those associated with the company.
The basis of allotment of shares will be finalized on August 10, and refunds will be initiated on August 11. Allottees can expect the shares to be credited to their demat accounts on August 14. SBFC Finance IPO is set to be listed on both the BSE and NSE on August 16, marking an important milestone for the company and its investors.
Market Perception and Grey Market Premium:
The SBFC Finance IPO has garnered considerable interest in the grey market, with a premium of ₹38 per share. The grey market premium indicates the willingness of investors to pay more than the issue price, reflecting positive market sentiment and strong demand for the company’s shares. Based on the upper end of the IPO price band and the current premium in the grey market, the estimated listing price for SBFC Finance shares is ₹95 apiece, indicating a significant 66.67% increase from the IPO price.
Conclusion:
The SBFC Finance IPO offers investors a promising opportunity to invest in a growing non-banking finance company with a diverse portfolio of loans catering to various segments. With a strong financial performance and an expanding customer base, SBFC Finance is poised for further growth and success. The IPO’s grey market premium reflects investors’ confidence in the company’s prospects, making it an attractive proposition for potential shareholders. As the IPO subscription opens on August 3, investors keen on being part of SBFC Finance’s journey can seize this chance to participate in its growth story.
