Clermont Group & Arpwood Partners-backed SBFC Finance kickstarts IPO prep, appoints 3 I-bankers

Initial Public Offering

Non-banking financial company ( NBFC) SBFC Finance which is backed by Singapore’s Clermont Group & Arpwood Partners has initiated the process to launch an initial public offer in FY 23 and ride the financial inclusion wave, multiple industry sources with knowledge of the matter told Moneycontrol. The Mumbai headquartered firm has appointed investment bankers for the same, these sources added.

If the listing plans fructify, SBFC Finance, which focuses on MSMEs, salaried and self-employed non-professionals will join the likes of NBFC peers Home First Finance and Aptus Value Housing Finance which also focus on low and middle-income groups, and made their market debuts last year. In May, private equity giant Blackstone-backed Aadhar Housing Finance got the Sebi nod for an IPO.

“ The IPO process was kicked off recently. ICICI Securities is the left lead and Axis Capital and HDFC Bank are the other advisors who have come on board,” said one of the persons cited above.

A second person said that the proposed IPO would be a combination of primary and secondary issues of shares and would facilitate a partial exit for investors like Arpwood Partners and help to mop up growth capital.

“ The firm focuses on small businesses which is a big market and the spread is very large,” this person added.

A third individual confirmed the listing plans and said that SBFC Finance would look to raise around or in excess of Rs 1,000 crores, though the quantum had not been finalized and could vary later.

“ The plan is to file the DRHP ( draft red herring prospectus ) with market regulator Sebi by Q2 of the current fiscal,” the third person elaborated.

All the three persons above spoke to Moneycontrol on the condition of anonymity. ICICI Securities declined to comment.

Moneycontrol is awaiting an email response from Clermont Group, Arpwood Capital, Axis Capital & HDFC Bank and will update this article as soon as we hear from the firms.

SBFC FINANCE: TOP BRASS, FOOTPRINT, AND FINANCIALS

Aseem Dhru is the CEO of SBFC Finance which has a “phyGital” business model and presence in 126 cities with branches in 16 states. Before SBFC, Dhru led HDFC's business banking offer for India’s agricultural sector and rural communities.

Clermont Group, a Singapore-based conglomerate that focuses on financial services, healthcare, and aviation holds a 73 percent stake, and Arpwood Group which is led by Rajeev Gupta, Amol Jain, and Manoj Dengla holds a 23 percent stake according to the 2020-21 annual report.

SBFC Finance kick-started operations in 2017 and acquired the portfolio of Karvy Financial Services Private Limited with 65 branches and 700+ people. The firm’s annual report highlights government data according to which the country’s MSME sector is dominated by microenterprises (India has 6.33 crore MSMEs of which 6.30 crore i.e., 99.4% are micro-enterprises).

“Of these MSMEs in India, only 8% of them avail any form of organised credit,” the report adds. SBFC Finance sees an opportunity to tap this under-served market.

As of March 31, 2022, the company had an AUM of Rs 3,342 crore, a total income of Rs 511 crore, disbursements of Rs 1,266 crores, and a PAT of Rs 85 crore which had surged by 140 percent on a YoY basis.