The capital markets regulator Securities and Exchange Board of India (SEBI) has given the go-ahead to Equitas Holdings Ltd for its initial public offering.
The Chennai-based microfinance institution (MFI) had filed its draft red herring prospectus in October, a month after it received in-principle approval from the Reserve Bank of India (RBI) along with eight other MFIs to launch a small finance bank.
The proposed issue would make Equitas the second MFI to go public, after SKS Microfinance Ltd listed on the bourses in 2010. It could be the first small finance bank to go public and reduce its foreign shareholding to 49 per cent to comply with RBI norms.
Foreign investors, including overseas incorporated bodies, currently hold around 93 per cent of the firm.
Bengaluru-based MFI Ujjivan Financial Services Ltd has also filed its draft herring prospectus with SEBI for its public issue.
Equitas plans to raise Rs 600 crore ($90 million) through a fresh issue of shares, besides giving part and full exit to several private investors. It said that it may raise Rs 300 crore by selling shares to institutional investors ahead of the IPO.
Equitas counts around a dozen venture capital, private equity and development financial institutions as investors. The company was started in 2007 by PN Vasudevan, who holds a 3.17 per cent stake and is selling a small chunk of it as part of the offer for sale.
The company operates through units Equitas Microfinance Pvt Ltd, Equitas Finance Ltd (for vehicle and small businesses) and Equitas Housing Finance Pvt Ltd. As of June 30, 2015, it had 520 branches across 11 states, one union territory and the NCT of Delhi.
For the financial year ended March 31, 2015, the company's consolidated revenue was Rs 755.93 crore versus Rs 483.52 crore in 2013-14. Its net profit rose 40 per cent last year to Rs 106.6 crore. Its assets under management as of June 30, 2015, stood at Rs 4,419.1 crore.
