Muthoot Finance's Microfinance Arm, Belstar Microfinance, Files for Rs 1,300-Crore IPO

Belstar Microfinance, Muthoot Finance's arm, files IPO papers to raise Rs 1,300 crore. The IPO includes a fresh issue of Rs 1,000 crore and an OFS of Rs 300 crore by investors like MAJ Invest, Arum Holdings, and Augusta Investments. Proceeds from the fresh issue will be used for lending and general corporate purposes. Belstar offers micro enterprise, consumer goods, and education loans, primarily through the SHG model. The microfinance firm reported a profit of Rs 235 crore and revenue of Rs 1,283 crore in the nine months ended December 2023.

Muthoot Finance's microfinance arm, Belstar Microfinance Ltd, on Sunday filed preliminary papers with capital markets regulator Sebi to raise Rs 1,300 crore through an initial public offering (IPO).

The Chennai-based entity's IPO is a combination of fresh issue of equity shares worth Rs 1,000 crore and an offer-for-sale (OFS) of Rs 300 crore by investor shareholders, according to the draft red herring prospectus (DRHP).

As a part of the OFS, Danish asset management firm MAJ Invest aims to sell shares to the tune of Rs 175 crore, followed by Arum Holdings Ltd (Rs 97 crore) and Augusta Investments Zero Pte Ltd (Rs 28 crore).

Maj Invest had first invested in Belstar Microfinance in 2018 and again in 2022.

At present, Muthoot Finance, which is one the promoters, holds a little over 66 per cent stake in Belstar Microfinance.

Proceeds from the fresh issue worth Rs 760 crore will be used to meet future capital requirements towards onward lending and the remaining amount will be used for general corporate purposes.

Belstar Microfinance, a Non-Banking Finance Company - Micro Finance Institution (NBFC-MFI), offers a wide range of loan products, such as micro enterprise, small enterprise, consumer goods, festival, education and emergency loans.

Also, its lending model primarily centers around the 'self-help group' (SHG) model, which accounts for 57 per cent of total loan portfolio as of December 31, 2023.

For the nine months ended December 2023, the microfinance firm posted a profit of Rs 235 crore with a revenue of Rs 1,283 crore.

ICICI Securities, Axis Capital, HDFC Bank and SBI Capital Markets have been appointed as book running lead managers to manage the company's public issue.

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