Asirvad Micro Finance may be the first casualty of the ongoing problems being experienced by the microfinance industry. The company was expected to hit the capital market by end of September but highly placed sources aware of developments say plans to list Asirvad Micro Finance may have been deferred by its promoter, Manappuram Finance, due to unfavouable market conditions.
Manappuram Finance holds over 98 percent stake in the MFI arm.
“Until a few weeks ago, there were active road shows taking place for the IPO. That has come to halt now,” said the one of the people cited. “There isn’t much work happening on the ground pertaining to listing of the company any longer,” said another person with knowledge of the matter.
The MFI sector has been under stress since the start of this fiscal and delinquency levels have risen for most lenders. Recently, Fusion Finance Limited revised its provisioning estimates up from Rs 348 crore to Rs 550 crore, signaling further asset quality pressures.
Industry experts say this development has dampened the investor outlook for the MFI sector. “Consequently, there also seems to be a reasonable difference in valuation expectations of the Asirvad’s promoters and what the market was willing to pay. This is mismatch may have also resulted in deferring the IPO,” said a banker aware of the matter.
An email sent to Manappuram Finance seeking comments on the listing plans for Asirvad Micro Finance remained unanswered till publishing the article. When contacted on phone, VP Nandakumar, MD & CEO, Manappuram Finance said the IPO plan for Asirvad Micro Finance has been deferred. He did not offer any guidance on revised timelines for listing.
To put things in context, Asirvad Micro Finance filed its draft red herring prospectus in October 2023 and the Sebi approval same through on April 30, 2024. JM Financial, Kotak, Nomura and SBI Caps were appointed to manage the IPO.
Sized at Rs 1,500 crore of fresh issue of shares, if the IPO gets deferred beyond September, sources say Manappuram Finance may infuse some capital to meet the near-term requirements of Asirvad Micro Finance.
Manappuram Finance acquired Asirvad Micro Finance in 2015 as part of its diversification strategy. As on June 30, 2024, the MFI business posted a net profit of Rs 1,340 crore and revenue of Rs 7,530 crore. Its capital adequacy stood at Rs 21.8 percent.
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