SBFC Finance Limited’s Initial Public
Offering to open on Thursday, August 3, 2023, sets price band at ₹54 to ₹57 per
Equity Share
·
Price Band of ₹54 – ₹57 per equity share
bearing face value of ₹10 each (“Equity
Shares”)
·
Bid/Offer Opening Date – Thursday, August 3,
2023 and Bid/Offer Closing Date – Monday, August 7, 2023.
·
Minimum Bid Lot is 260 Equity Shares and in
multiples of 260 Equity Shares thereafter.
·
The Floor Price is 5.4 times the face value of
the Equity Share and the Cap Price is 5.7 times the face value of the Equity
Share.
Risks
to Investors
Regulatory Risk
• As an NBFC, we are subject to periodic inspections by the RBI.
Non-compliance with observations made by the RBI during these inspections could
expose us to penalties and restrictions.
• We are subject to laws and regulations governing the financial services
industry and our operations in India, including laws in relation to capital
adequacy ratios. Changes in regulations governing us could adversely affect our
business, results of operations and prospects.
• Our non-convertible debentures are listed on the BSE and we are subject
to rules and regulations with respect to such listed non-convertible
debentures. We have had instances of non-compliances in the past and if we fail
to comply with such rules and regulations, we may be subject to certain penal
actions, which may have an adverse effect on our business, results of
operations, financial condition and cash flows.
Business Risk
• The risk of non-payment or
default by our borrowers may adversely affect our business, results of
operations and financial condition.
• The quality of our portfolio may be impacted due to higher levels of
NPAs and our business may be adversely affected if we are unable to provide for
such higher levels of NPAs. Set forth below are details of our asset quality
ratios, as well as provision coverage ratio, as of each of the corresponding
periods:
|
Particulars
|
As of March 31,
|
|
2021
|
2022
|
2023
|
|
Gross NPA (1) (₹million)
|
666.55
|
828.94
|
1,081.65
|
|
Gross NPA ratio (2) (%)
|
3.16%
|
2.74%
|
2.43%
|
|
Net NPA (3) (₹million)
|
411.59
|
493.72
|
626.88
|
|
Net NPA ratio (4)(%)
|
1.95%
|
1.63%
|
1.41%
|
|
Provision Coverage Ratio (5) (%)
|
38.25%
|
40.44%
|
42.04%
|
(1)
Gross NPA represents Gross Loan Book pertaining to loans which are required to
be classified as NPA as per the Income Recognition, Asset Classification and
Provisioning norms issued and modified by RBI from time to time.
(2)
Gross NPA ratio (%) represents the Gross NPA to the Gross Loan Book as of the
last day of the relevant period.
(3) Net
NPA represents Gross NPA reduced by NPA provisions as of the last day of
relevant period.
(4) Net
NPA ratio (%) represents the Net NPA to the Gross Loan Book as of the last day
of the relevant period.
(5)
Provision Coverage Ratio represents total provisions held on Gross NPA as of
the last day of the period, as a percentage of total Gross NPAs as of the last
day of the period.
• Our inability to assess and recover the full
value of collateral, or amounts outstanding under defaulted loans in a timely
manner, or at all, could adversely affect our business, results of operations
and financial condition.
• We require substantial capital for our
business and any disruption in our sources of capital could have an adverse
effect on our business, results of operations and financial condition.
• Our business is particularly vulnerable to
interest rate risk, and volatility in interest ratesfor both lending and
treasury operations, could have an adverse effect on our net interestincome and
net interest margin, thereby affecting our results of operations and cashflows.
• The Weighted Average Cost of acquisition of
all Equity Shares transacted in last three
years, 18 months and one year:
|
Period
|
Weighted
Cap Price is Range of Average Cost of Acquisition per Share (in ₹ )
|
Cap
Price is Range of Average Cost 'x' times the weighted average cost of
acquisition^
|
Range of
Acquisition price per Equity Share: per Equity average cost Lowest Price
- Highest Price (in ₹)
|
|
Last one
year
|
44.95
|
1.27
|
12.50 to
60.00
|
|
Last 18
months
|
43.02
|
1.32
|
12.50 to
60.00
|
|
Last three
years
|
41.57
|
1.37
|
12.50 to
60.00
|
As certified
by M/s Suresh Surana & Associates LLP, Statutory Auditors, vide their
certificate dated July 28, 2023.
Weighted
average cost of acquisition compared to Floor Price and Cap Price:
|
Past Transactions
|
Weighted Average Cost of
Acquisition (in ₹)
|
Floor
price of ₹54
|
Cap price
of ₹ 57
|
|
WACA of primary issuance in last 18
months
|
40.00
|
1.35 times
|
1.43 times
|
|
WACA of secondary issuance in last
18 months
|
55.00
|
0. 98 times
|
1.04
times
|
As certified
by M/s Suresh Surana & Associates LLP, Statutory Auditors, pursuant to a
certificate dated July 28, 2023.
•Average cost of acquisition of Equity Shares
for the Promoters and Promoter Selling Shareholders namely, SBFC Holdings Pte.
Ltd. is ₹ 16.08,
Arpwood Partners Investment Advisors LLP is ₹ 12.69, Arpwood Capital Private Limited is ₹ 15.98
and Eight 45 Services LLP is ₹ 12.73 and the Offer Price at the upper end of the Price Band is ₹ 57 per
Equity Share.
• The Price/Earnings ratio based on diluted
EPS for Fiscal 2023 for our Company at the upper end of the price band is 35.19
times and Price/Earnings ratio of the average industry peer group as on the
date of the RHP is 30.44 times.
• Weighted Average Return on Net Worth for
Fiscals 2023, 2022 and 2021:
|
Year
ended
|
RoNW
(%)
|
Weight
|
|
As on
March 31, 2023
|
9.93
|
3
|
|
As on
March 31, 2022
|
5.18
|
2
|
|
As on
March 31, 2021
|
7.67
|
1
|
|
Weighted
Average
|
7.97
|
|
• Our market
capitalisation at the lower end and higher end of price band to revenue from
operations for Fiscal 2023 is 7.88 times and 8.28 times respectively.
• The three BRLMs
associated with the Offer have handled 88 public issues in the past three
Fiscal Years, out of
which 30 issues closed below the Offer price on the listing date.
|
Name of the BRLM
|
Total Issues
|
Issues closed below IPO price on
listing date
|
|
ICICI Securities Limited*
|
15
|
4
|
|
Axis Capital Limited*
|
19
|
6
|
|
Kotak Mahindra Capital Company
Limited*
|
13
|
3
|
|
Common Issues of above BRLMs
|
41
|
17
|
|
Total
|
88
|
30
|
*Issues handled where there were no common
BRLMs
Mumbai, July 31, 2023:SBFC Finance Limited (”Company”) is a systemically
important, non-deposit taking non-banking finance company (“NBFC-ND-SI”)
offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers
being entrepreneurs, small business owners, self-employed individuals, salaried
and working class individualshas fixed the price band at ₹ 54to ₹
57per Equity Share for its maiden public offer. The initial public offering
(“IPO” or “Offer”) of the
Company will open on Thursday, August 3, 2023, for subscription and closes on Monday,
August 7, 2023. Investors can bid for a minimum of 260Equity Shares and
in multiples of 260Equity Shares thereafter.
The Public Issue of face value of ₹10 per Equity Share
comprises of fresh issuance of equity shares worth Rs 600 crore and an Offer
for Sale of Rs425 crore.
SBFC Finance is an NBFC in India that concentrates on supporting
Micro, Small, and Medium Enterprises (“MSMEs”). According to a CRISIL
Report, among MSME-focused NBFCs in India, the company has achieved one of the
highest growth in its assets under management (“AUM”), with a Compound
Annual Growth Rate ("CAGR”) of 44% during the period from Fiscal
2019 to Fiscal 2023. Additionally, it has experienced robust disbursement
growth, with a CAGR of 40% between Fiscal 2021 and Fiscal 2023. As of March 31,
2023, the average ticket size for its Secured MSME Loans stood at ₹0.99 million
and for its Loans Against Gold stood at ₹0.09 million, based on disbursed
amounts. The Company's total AUM as of March 31, 2023, amounted to ₹4,942.82
crore, and it had provided loans to 102,722 customers as of such date.
The Company primarily caters to customers in tier II and tier III
cities, thereby fostering entrepreneurship in these regions. It focuses on
serving customers who have a strong credit history but may lack formal proof of
income documents. By focusing on this niche, the Company aims to address the
funding needs of underserved individuals and businesses. As of March 31, 2023, the
Company boasts an expansive footprint in 120 cities across 16 Indian states and
two union territories, operating through a network of 152 branches. This
widespread presence enables the Company to reach a diverse customer base and
provide financial assistance to those in need throughout the country.
ICICI Securities Limited, Axis Capital
Limited, and Kotak Mahindra Capital Company Limited are the book running lead
managers to the Offer and KFin Technologies Limited is the Registrar to the Offer.
The Equity Shares are proposed to be listed on BSE and NSE.
