In no rush to float equipment finance IPO in current ‘weak’ market: Srei

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Kolkata | Published: August 8, 2018 5:51:17 AM

Srei Infrastructure Finance will not rush into launching an initial public offering (IPO) of its wholly-owned subsidiary Srei Equipment Finance (SEFL) as it feels the current overall market sentiments are ‘weak’.

Srei, Srei Infrastructure Finance, initial public offering, Srei Equipment Finance, marketNotably, SEFL, which is a market leader in the country’s equipment financing space with around one-third share of the market, had initially planned to tap the capital market within the last financial year.

Srei Infrastructure Finance will not rush into launching an initial public offering (IPO) of its wholly-owned subsidiary Srei Equipment Finance (SEFL) as it feels the current overall market sentiments are ‘weak’. Talking to FE, Hemant Kanoria, chairman and managing director of Srei Infrastructure Finance, said the equipment financing arm is looking for the market to recover in order to float the proposed IPO. “However, we are not going to wait till the last date (of this fiscal)…by beginning of the fourth quarter we would like to conclude the proceedings. But it will depend on the market,” Kanoria said in an interview.

Notably, SEFL, which is a market leader in the country’s equipment financing space with around one-third share of the market, had initially planned to tap the capital market within the last financial year. The firm was looking to raise between Rs 1,800-2,000 crore through the IPO for a faster business growth. Kanoria, however, said the size of the IPO would depend on the ‘appetite’ of the market. “Therefore, only when we get into the market we will be able to determine what should be the right size, pricing etc. However, we are preparing to be in the state of readiness, that’s the objective,” he emphasised.

The board of directors of Srei Equipment Finance had in August last year approved an initial public offering of up to 25% of the post-issue paid-up equity share capital of the firm. It had filed draft red herring prospectus with Sebi for its IPO in November. “We don’t see Sebi approval taking a long time. However, for us being in a state of preparedness is in terms of time, pricing and demand. We will go ahead as per the advice of our investment bankers,” Kanoria said.

Srei has hired investment bankers such as ICICI Securities, CLSA India, Credit Suisse Securities (India), IIFL Holdings, Motilal Oswal Investment Advisors and Nomura Financial Advisory and Securities (India) among others as lead managers. SEFL said the proceeds from the IPO would be induced in the equipment finance business. Last fiscal, its disbursements stood at Rs 16,990 crore, posting around 45% year-on-year growth. The company aims at maintaining this pace of growth for the current financial year with the equipment finance market growing well.

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