Multiples PE-backed Veritas Finance plans over Rs 3,000 crore IPO

The IPO will primarily comprise a secondary sale of shares by existing investors of the company

Tamil Nadu-based MSME lender Veritas Finance Private Ltd is planning to file draft papers for its initial public offering (IPO) to raise over Rs 3,000 crore by November, people aware of the lender’s plans told Moneycontrol.

The non-banking finance company (NBFC) is backed by investors including Multiples PE, Kedaara Capital and Norwest Venture Partners, among several others.

“Veritas is working with investment banks ICICI Securities, Kotak Mahindra Capital, Jefferies and HDFC Bank on its proposed IPO. They are targeting to file the draft red herring prospectus before the end of November with the financial figures for the first half of FY25. The company is hoping to hit the markets with its IPO in Q4 of FY25 if it does not face any delays in filing the DRHP and receipt of approval from the market regulator,” said one of the sources.

The IPO will primarily comprise a secondary sale of shares by existing investors of the company, the sources added.

Started in 2015 by D. Arulmany, a lending industry veteran with over 25 years of experience at Murugappa group and other lending institutions, Veritas had a loan book of Rs 6,091 crore, 387 branches and close to 2 lakh customers across various regions as of June 30, 2024.

The lender's products for MSMEs include micro business loans, short-term working capital loans, used commercial vehicle loans, home loans and loans against property.

IPO details

About Rs 2,000 crore of the IPO will be an offer for sale by the investors, while the NBFC will raise around Rs 750-1,000 crore in primary capital to fund its growth.

The size of the offer-for-sale component of the IPO may go up further depending on investor demand and market conditions at the time of the launch of the share sale, sources added.

“The company evaluates various capital raising and funding options from time to time. We will be guided by the board with regard to the appropriate options given the market conditions and requirement. We would update at the right time in the event of any key decisions with respect to the same,” a spokesperson for Veritas Finance told Moneycontrol.

Also Read: Veritas Finance secures Rs 1200 crore investment to strengthen MSME reach

The financials

As per a Care Ratings report, in FY24 Veritas Finance saw its loan disbursements grow to Rs 3,702 crore as compared to disbursements worth Rs 2,245 crore in FY23.

“AUM (assets under management) grew by 62 percent in FY24 (62 percent in FY23) and stood at Rs 5,724 crore as on March 31, 2024, as against Rs 3,534 crore as on March 31, 2023.  Small business loans /MSME loans continue to comprise majority proportion of AUM with 61 percent as on March 31, 2024 (73 percent as on March 31, 2023). Working capital loan has grown by 77 percent in FY24 and is now contributing 11 percent of the AUM. Loan against property product comprises 14 percent of AUM as on March 31, 2024. Home loan, which was 3 percent of the portfolio as on March 31, 2023, has increased to 14 percent as on March 31, 2024,” the Care Ratings report noted.

Veritas Finance’s profit increased to Rs 245 crore in FY24, as against a profit of Rs 176 crore in the previous fiscal. Revenue in FY24 increased to Rs 1,124 crore, compared to FY23’s revenue of Rs 682 crore.