India: Microfinance lender Ujjivan to submit IPO papers before year-end

Visual from Ujjivan website

Ujjivan Financial Services Pvt. Ltd, the microfinance lender that was granted a provisional licence to convert into a small finance bank, is looking to file its draft initial public offering (IPO) papers with market regulator Securities and Exchange Board of India (Sebi) before December-end, according to two people aware of the development.

The firm plans to raise around Rs.1,500 crore through its initial share sale, said the first person cited above, requesting anonymity.

On 19 October, Mint reported that Ujjivan had hired investment banks and was planning an IPO.

“The company is looking to file the papers before December-end, but there are slight chances that it might spill over to the first week of January,” said the person quoted above.

A major chunk of the funds raised will comprise sale of shares by Ujjivan’s private equity investors, while the firm will also raise a small amount to fund its business, said the second person mentioned above, also requesting anonymity.

The company declined to comment on questions on its IPO plans.

Ujjivan, in which foreigners owned 88.69% as on 31 March, has to ensure that overseas shareholding in the company drops to 49%, one of the conditions that the company has to meet to become a small finance bank. The share sale is aimed at raising funds and giving overseas investors an opportunity to sell their stakes in the microfinance lender founded by veteran banker Samit Ghosh.

Ujjivan is the second of the 10 companies that won Reserve Bank of India (RBI) approval for setting up small finance banks to initiate work on selling shares to the public. Chennai-based microfinance lender Equitas Holdings Ltd filed share sale documents with the capital market regulator. It is planning to raise about Rs.2,000 crore through its IPO. Equitas filed its draft IPO paper with Sebi on 16 October.

Small finance banks and microfinance institutions are expected to raise as much as Rs.4,000-5,000 crore over the next 12 months, either through the public markets or private equity, according to a September report by investment bank Avendus Capital.

Founded in 2006, Ujjivan’s investors include International Finance Corp. (IFC), UK’s development finance institution CDC, venture capital firm Sequoia Capital and home-grown private equity fund CX Partners.

CDC is currently the biggest shareholder in the company with a 12.69% stake, followed by IFC and CX Partners, which own 11.84% and 10.69%, respectively.

On 16 September, the RBI issued small finance bank licences to Ujjivan, Equitas, Janalakshmi Financial Services Pvt. Ltd, Au Financiers (India) Ltd, Capital Local Area Bank Ltd, Disha Microfin Pvt. Ltd, ESAF Microfinance and Investments Pvt. Ltd, RGVN (North East) Microfinance Ltd, Suryoday Micro Finance Pvt. Ltd and Utkarsh Micro Finance Pvt. Ltd. Eight of the 10 are microlenders. Many have significant foreign holdings because of early investments from private equity funds and multilateral institutions and will have to comply with the RBI’s rules to convert into small finance banks.

In January, Ujjivan raised Rs.600 crore from a clutch of investors including CDC, CX Partners, NewQuest and a unit of the Bajaj Group.

In the year ended 31 March, Ujjivan’s revenue rose 72% toRs.599.3 crore from a year earlier. Net profit rose 38% to Rs.75.8 crore from Rs.55 crore. It disbursed loans worth Rs.4,328 crore in the year and had a network of 423 branches across the country.

Also Read: 

MFI Janalakshmi rules out IPO in near term; to rejig structure to meet RBI small bank norms

Indian microlender-turned-small finance bank Equitas plans IPO

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.