- Offer will close on Friday, November 4, 2022
- Bids can be made for a minimum of 40 Equity Shares and in multiples of 40 Equity Shares thereafter
- It is planning to drive its secured loans business by introducing a separate NBFC that will be targeted toward SMEs
NE BUSINESS BUREAU
AHMEDABAD, NOV 1
The initial public offering (IPO) of country’s youngest and tech-savvy microlender Fusion Microfinance, backed by global private equity major Warburg Pincus, will open for public subscription on Wednesday, November 2, 2022 and will conclude on Friday, November 4, 2022. The Anchor Investor Bidding Date shall be Tuesday, November 1, 2022. Through this offer it plans to raise about ₹1,100 crore.
Fusion Microfinance IPO comprises fresh issuance of equity shares worth ₹600 crore and an offer of sale (OFS) of 13,695,466 equity shares by promoters and existing shareholders.
As per market observers, Fusion Microfinance shares are commanding a premium (GMP) of ₹33 in the grey market. The company’s shares are expected to list on stock exchanges BSE and NSE on Tuesday, November 15, 2022.
The New Delhi-headquartered microfinance company provides financial services to underserved women across India to facilitate their access to greater economic opportunities. The company’s business runs on a joint liability group-lending model, wherein a small number of women form a group -typically comprising five to seven members – and guarantee one another’s loans.
Fusion Microfinance is planning to drive its secured loans business by introducing a separate NBFC that will be targeted toward small and medium-sized enterprises (SMEs)
MD & CEO Devesh Sachdev said, “We’ve been lending to MSMEs for some time now and currently have ₹200 crore assets under management. This is a fully secured, collateral-free loan and we give up to ₹3.25 lakh to borrowers most of whom are existing borrowers. Post-IPO, we want to scale this book up and will be hiving off as separate NBFC but will remain part of the parent Fusion.”
Sachdev pointed out that as of now their company has been using its own capital for onward lending. However, once a separate entity is launched he said they will be able to borrow separately from banks. He expects to get funds at a marginally cheaper rate from banks.
Those selling shares in the OFS are Devesh Sachdev (founder and chairman of the MFI), his wife Mini Sachdev, Honey Rose Investment and two funds of Creation Investments Fusion, the Dutch impact investor Oikocredit Ecumenical Development Co-operative Society, and Global Financial Inclusion Fund. Of these, Honey Rose and Creation Investments are funds owned by Warburg Pincus which entered the MFI in 2018 with a ₹520 crore funding.
Pre-offer Honey Rose Investment (Warburg) directly owns 48.65% in the company and the two Creation Investments Fusion funds, Oikocredit Ecumenical Development, and Global Financial Inclusion Fund holding another 36.56% and the Sachdevs 8.21%, taking the total to 85.21%. Post issue Warburg will pare 12% and Sachdevs under 1% to take their stake to 7.5%.
According to CRISIL, the Company had the fourth lowest gross loan portfolio per district and second lowest gross loan portfolio per customer among the top ten NBFC-MFIs in India, for the financial year 2022, demonstrating better diversification and lower risk per customer.
