Norwest Venture, Kedaara Capital-backed Veritas Finance files draft papers with SEBI to raise Rs 2,800 crore via IPO

Veritas Finance IPO

NBFC Veritas Finance, which is backed by private equity investors like Norwest Venture, Kedaara Capital, and British International Investment Plc, has filed preliminary papers with the capital markets regulator SEBI as it plans to raise Rs 2,800 crore via initial public offering.

Established in 2015, Veritas Finance is a non-deposit taking non-banking financial company (NBFC) with a total AUM of Rs 6,517.2 crore (as of September 2024), providing small business loans to micro, small and medium enterprises (MSMEs) and self-employed individuals.

Moneycontrol had reported in October 2024 that the Tamil Nadu-based MSME lender is planning to file draft papers for its IPO to raise over Rs 3,000 crore by November 2024.

The IPO will comprise of fresh issuance of equity shares worth Rs 600 crore, and an offer-for-sale of Rs 2,200 crore worth shares by the existing shareholders.

Investors - Norwest Venture Partners X –Mauritius, and Kedaara Capital Fund II LLP will be selling shares worth Rs 550 crore each in the offer-for-sale, followed by British International Investment Plc and Lok Capital Growth Fund which plans to offload shares worth Rs 500 crore, and Rs 425 crore respectively.

Growth Catalyst Partners LLC, Vidya Arulmany, P Surendra Pai, Savita S Pai, Sheela Pai Cole, and Moneisha Sharad Gandhi will be other selling shareholders in the offer-for-sale.

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Norwest Venture Partners X - Mauritius with 21.76 percent stake is the largest shareholder in the MSME lender, followed by Kedaara Capital Fund II LLP (15.2 percent), British International Investment Plc (10.41 percent), and D Arulmany (9.42 percent).

The professionally managed company may also raise funds up to Rs 120 crore in the pre-IPO round. If the pre-IPO placement is completed, the said amount will be reduced from the fresh issue.

Veritas Finance that competes with several listed entities like Five Star Business Finance, SBFC Finance, Aavas Financiers, Aptus Value Housing Finance, Cholamandalam Investment and Finance, and Sundaram Finance is planning to utilise fresh issue proceeds for augmenting its capital base to meet future business requirements towards onward lending.

Also read: Vinir Engineering files IPO papers, comprises only OFS with no fresh issue component

It claimed to be the fastest-growing NBFC in terms of loans (AUM) growth among compared peers during FY22-FY24, with a compounded annual growth rate of 61.76 percent. The disbursements in FY24 grew by nearly 65 percent to Rs 3,702.43 crore compared to previous fiscal, and the same in the six months period ended September 2024 increased by 14.26 percent to Rs 1,837.9 crore compared to year-ago period.

The profit in the year ended March 2024 soared 38.9 percent to Rs 245 crore and net interest income grew by 53.6 percent to Rs 718.1 crore compared to previous fiscal. Profit for the April-September period of 2024 stood at Rs 133.1 crore, and net interest income at Rs 450.2 crore.

ICICI Securities, HDFC Bank, Jefferies India, Kotak Mahindra Capital Company, and Nuvama Wealth Management are appointed as the book running lead managers for the issue.