Muthoot Finance gains as arm Belstar Microfinance gets Sebi nod to launch IPO

Microfinance subsidiary, Belstar Microfinance gets Sebi's approval to launch IPO

Muthoot Finance shares gained 1.5 percent to Rs 1,993 on September 3 following market regulator Sebi’s approval for its microfinance subsidiary, Belstar Microfinance, to launch an initial public offering (IPO). The IPO will feature a fresh issue of Rs 1,000 crore and an offer for sale (OFS) of Rs 300 crore.

Within this OFS, Danish asset management firm MAJ Invest plans to sell shares worth Rs 175 crore, followed by Arum Holdings with Rs 97 crore, and Augusta Investments Zero Pte with Rs 28 crore. The merchant bankers handling the IPO are ICICI Securities, Axis Capital, HDFC Bank, and SBI Capital Markets.

MAJ Invest first invested in Belstar Microfinance in 2018 and again in 2022. Currently, Muthoot Finance, one of the promoters, holds just over a 66 percent stake in Belstar Microfinance.

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The proceeds from the fresh issue will be allocated towards future capital needs for onward lending, while the remaining funds will be used for general corporate purposes.

Belstar Microfinance, a non-banking finance company — Micro Finance Institution (NBFC-MFI), offers various loan products, including micro-enterprise, small enterprise, consumer goods, festival, education, and emergency loans. Its lending primarily revolves around the ‘self-help group’ (SHG) model, which makes up 57 percent of its total loan portfolio as of December 31, 2023.

According to the draft red herring prospectus (DHRP), Belstar Microfinance’s total revenue from operations reached Rs 1,283 crore as of December 31, 2023, up from Rs 727 crore on March 31, 2022. Meanwhile, its profit surged to Rs 235 crore in Q1 FY25 from Rs 45 crore in the same period the previous year.

Meanwhile, Muthoot Finance registered highest-ever consolidated profit of Rs 1,196 crore in the recently concluded June quarter, with highest-ever consolidated loan assets under management of Rs 98,048 crore.

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