Belstar Microfinance files DRHP with SEBI to raise ₹1,000 Crore via IPO

6 May 2024 , 02:57 PM

Muthoot Finance announced on May 5 that its subsidiary, Belstar Microfinance, has filed the draft red herring prospectus for a proposed initial public offer (IPO) of ₹1,300 Crore with the Securities and Exchange Board of India (SEBI).

According to Muthoot’s release, the issue will include a fresh issue of equity shares valued at ₹10 each, totaling up to ₹1,000 Crore, along with an offer for sale of equity shares worth ₹300 Crore by certain existing non-promoter shareholders. Muthoot Finance had initially acquired a 53% stake in Belstar in 2017 as part of its diversification strategy and has since increased its stake to over 66.13%.

MAJ Invest, a Danish asset management firm, intends to sell shares worth ₹175 Crore through the offer for sale (OFS). Having invested in the non-banking lender in 2018 and 2022, MAJ Invest currently holds approximately 8.74% in Belstar. Other investors such as Arum Holdings and Augusta Investments Zero Pte also plan to sell shares worth ₹97 Crore and ₹28 Crore, respectively.

Belstar aims to utilize ₹760 Crore of the net proceeds from the fresh issue to meet future capital requirements for lending purposes, while the remaining funds will be allocated for general corporate purposes, as stated in the draft papers. The company’s lending model primarily focuses on the ‘self-help group’ (SHG), constituting 57% of its total loan portfolio as of December 31, 2023.

For the period of April to December 2023, the Chennai-based microfinance firm reported a profit of ₹235 Crore with a revenue of ₹1,283 Crore. ICICI Securities, Axis Capital, HDFC Bank, and SBI Capital Markets have been appointed as book running lead managers to oversee the company’s public issue.