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May 08, 2018 09:22 AM IST | Source: Moneycontrol.com

IndoStar Capital Finance IPO to open for subscription on May 9: 5 things to note

The IPO, the first in FY19, is scheduled to open on May 9 and close on May 11. Anchor investor allocation will be a day prior to the bid/offer opening date: May 8

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IndoStar Capital Finance will soon be approaching the primary market with its public issue, with an aim to raise Rs 2,000 crore. This includes a fresh capital infusion of Rs 700 crore. The Everstone Capital-backed non-banking finance company’s initial public offering (IPO) is priced between Rs 570 to Rs 572 per equity share of face value Rs 10.

The IPO, the first in FY19, is scheduled to open on May 9 and close on May 11. Anchor investor allocation will be a day prior to the bid/offer opening date: May 8. The company intends to primarily utilise net proceeds of the fresh issue for augmenting its capital base to meet its future capital requirements.

The non-banking financial company (NBFC) is engaged in providing structured term financing solutions to corporates as well as loans to small and medium enterprises (SME), its website states. Recently, it expanded its portfolio to offer vehicle finance and housing finance products through its wholly-owned subsidiary IndoStar Home Finance Pvt.

Here are five things to know about the issue:

Issue details
The IPO is priced between Rs 570 and Rs 572 per share of face value Rs 10. The lot size has been set at 26 shares, which at the upper end of the price band accrues to Rs 14,872. The issue will open on May 9 and close on May 11.
The proceeds will be used to augment its capital base for meeting its future capital requirements. The company plans to raise Rs 1,800-2,000 crore including fresh capital worth Rs 700 crore. The balance would be raised through sale of 20 million shares by existing promoters.

The shares will be listed on the National Stock Exchange and BSE.

Management
The company is led by R Sridhar who is also the Whole-Time Director and Executive Vice-Chairman. As CEO, he is responsible for overall management and administration of the business. Sridhar has three-decades of experience in the financial services space, its website states. He was previously associated with various entities of the Shriram group and was Managing Director of Shriram Transport Finance Company.

Chief Financial Officer Pankaj Thapar has more than 30 years of experience in various fields including corporate finance with Indian and international entities like Everstone Capital Advisors, Dentsu Marcom, Coca-Cola India, ANZ Grindlays Bank, Citibank India and ICICI.

Management

Financials

For 9M FY18, the company reported a profit after tax (PAT) of Rs 164.08 crore as against Rs 210.8 crore year-on-year. Total income stood at Rs 585.95 crore as against Rs 719.92 crore YoY.

financials

Strengths
According to its filings with the market regulator, the company believes its strengths include a highly motivated, professional and experienced management team along with a well-established corporate and strong SME lending businesses.
- Better asset quality achieved through robust credit assessment and risk management framework
- Well diversified funding profile

- Ownership by institutional investors ensuring international corporate governance standards

Risks
Among risks, it cites competition in vehicle and housing finance space. It has also listed a few others in its prospectus:
- Increasing competition in the vehicle and housing finance space
- Business highly sensitive to economic conditions
- Lower future growth would lead to under-utilisation of funds and lower return on equity- Higher-than-expected slippage from the corporate book
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