Belstar Microfinance Backed By Muthoot Files For an IPO Worth Rs.1,300 Cr

Belstar Microfinance, an NBFC-MFI, provides various loan options, including micro-enterprise, small businesses, consumer goods, festivals, education, and emergency loans. It is among the top 10 players in the NBFC-MFI sector, boasting a strong credit rating of “AA” with a stable outlook as assessed by Crisil. Muthoot Finance, the parent company, owns a majority stake of 66.13% in Belstar Microfinance.

Belstar Microfinance IPO

Belstar Microfinance has submitted a Draft Red Herring Prospectus (DRHP) to SEBI  for an IPO valued at Rs.1300 crore with a plan to increase the assets under management in each of these segments moving forward. This strategic move positions the company for significant growth and expansion in the NBFC-MFI sector. As outlined in the DRHP, the IPO comprises a fresh issue of equity shares worth Rs 1000 crore and an offer-for-sale (OFS) of Rs.300 crore by existing investors. 

The company intends to generate funds through an initial public offering (IPO) of equity shares, each with a face value of Rs.10. The proceeds generated from the fresh issue, valued at  Rs.760 crore will be used to fulfil future capital needs for lending purposes, while the remaining amount will be utilized for general corporate objectives

In the Offer for Sale (OFS) for the IPO, MAJ Invest, a Danish asset management firm, plans to sell shares worth Rs.175 crore, followed by divestments from Arum Holdings Ltd (Rs.97 crore) and Augusta Investments Zero Pte Ltd (Rs.28 crore). ICICI Securities, Axis Capital, HDFC Bank, and SBI Capital Markets are set to serve as the book-running lead managers for the IPO. Further details like dates etc are yet to be announced.

SHG Loan Portfolio

As of December 31, 2023, Belstar predominantly operates through the ‘self-help group’ (SHG) model, which accounts for 57% of its overall loan portfolio. In the nine months ending December 2023, the company recorded a profit of Rs.235 crore from revenue amounting to Rs.1,283 crore.

Conclusion: Belstar Microfinance’s IPO presents investors with an opportunity to access a leading NBFC-MFI rated “AA”. With a substantial valuation of Rs. 1300 crore, including an Rs. 1000 crore fresh equity issue and Rs. 300 crore offer-for-sale, the IPO will fortify the lending capacities of the firm. Notable book-runners, including ICICI Securities and Axis Capital, further affirm its strong position. It signifies a milestone in promoting financial inclusion and sustainable growth in underserved communities by operating primarily with a 57% SHG loan portfolio.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.