New Delhi-headquartered Fusion Microfinance, which provides financial services to underserved women in rural and semi-urban regions in the country, is preparing an initial public offering (IPO) to raise around Rs 1,700 crore this year, people with knowledge of the matter told Moneycontrol. The firm is backed by US private equity firms Warburg Pincus and Creation Investments Capital Management.
“Fusion Microfinance has recently kicked off plans for a listing in 2021 and is looking to raise around Rs 1,700 crores,” said one of the persons cited above. The size of the IPO hasn’t been finalised as yet and may vary at a later stage, he added.
Last month, microfinance peer Arohan Financial Services filed papers with market regulator Sebi to raise around Rs 1,800 crore through an IPO. Key listed peers of Fusion Microfinance include the likes of Spandana Sphoorty Financial Ltd and Credit Access Grameen Ltd which have slipped by 20 percent and 13 percent, respectively in the last three months of trading.
“The IPO will facilitate a partial exit for the private equity investors and also raise some growth capital for the firm. As of now, the plan is to file the DRHP with Sebi in Q1 of FY21-22,” added a second person.
“ICICI Securities, JM Financial, IIFL Securities & CLSA are the investment banks working on the deal. Shardul Amarchand Mangaldas and Indus Law are the legal advisors,” said a third person.
“The firm has cracked the tougher MFI market for women in North India and is now well-positioned to expand pan-India. It works on the joint liability group lending model of Grameen,” said a fourth person.
“As part of this, they make smaller groups of customer and lending is provided to each of them but the impact of default falls on all. This unique method ensure the group members support each other,” this individual elaborated.
All four persons spoke to Moneycontrol on the condition of anonymity.
“Moneycontrol is awaiting an email response from Fusion Microfinance and has sent multiple reminders. This article will be updated as soon as we hear from the firm. ICICI Securities declined to comment while Moneycontrol is awaiting responses from CLSA, JM Financial, IIFL Securities, Shardul Amarchand Mangaldas and Indus Law.”
FUSION MICROFINANCE – A LOOK AT THE PROMOTERS & OPERATIONS
Devesh Sachdev, the vice-chairman and board member of MFIN is the founder and CEO of Fusion Microfinance. MFIN is a self-regulatory organisation for NBFC-MFI’s in India which works closely with regulators & key stakeholders to push for greater financial inclusion. Sachdev began his career with Citigroup and later spearheaded the growth of logistics company BSA into a pan-India entity offering diversified services.
According to the Fusion Microfinance website, its clients comprises of 100% women living in rural and semi-urban areas. “Our focus is reaching out to unbanked and providing financial services to women entrepreneurs belonging to the economically and socially deprived section of the society.
"Our responsibilities are not restricted merely to financial support but also to acquaint the clients to manage their financials by disseminating financial literacy to them,” the website adds.Fusion Microfinance was set up in 2010 and now serves 1.8 million active customers and, in turn, households across 18 states in India through a network of 591 branches & 5,490 people. For FY 2019-20, its revenue from operations stood at Rs 730.3 crore with profit after tax at Rs 70.12 crores, disbursements of Rs 3,572.8 crores, assets under management of Rs 3,606.52 crores and a balance sheet size of nearly Rs 4,240 crores.