IndoStar Capital Finance, a non-banking financial company, which is engaged in providing structured term financing solutions to corporates and loans to small and medium enterprises (SMEs), has set a price band of Rs 570-572 per share for its initial public offering (IPO). The IPO comprises a fresh issue of Rs 700 crore and an offer for sale of two crore shares, which at the upper price of the band will translate into an offer size of Rs 1,844 crore. The IPO will open on May 9 and close on May 11.
Bids can be made for a minimum of 26 shares and multiples of 26 shares after that. The company proposes to utilise the net proceeds from the fresh issue towards augmenting its capital base to meet future capital requirements. The company will not receive any proceeds from the offer for sale.
The promoter, IndoStar Capital, will be selling 1.85 crore shares through offer. The company has four principal lines of business, corporate lending, SME lending, vehicle financing and home financing. According to its DRHP (draft red herring prospectus), between fiscal 2013 and 2017, the company’s total credit exposure and revenue grew at a CAGR of 30% and 31.4%, respectively.
IndoStar’s total revenues have grown to Rs 719 crore for fiscal 2017 from Rs 241 crore in fiscal 2013, and profit after tax has risen to Rs 210 crore for fiscal 2017 from Rs 90 crore for fiscal 2013 (a CAGR of 23.7%).
The corporate lending business accounted for 76.8% of the advances for the nine-month period ended December 31, 2017, amounting to Rs 3,969.397 crore. As of December 31, 2017, the company’s Gross NPAs accounted for 1.7% of its gross advances.
In 2017, 36 companies raised Rs 67,147 crore through IPOs. Listing gains and returns by newly listed companies as also the positive sentiment in the broader market are among the reasons attributed to the trend.
BSE, GIC Re, NIA, Hudco, CDSL, Avenue Supermarts, Shankara Building Products, S Chand and Company and Cochin Shipyard are some of the companies who completed their IPOs in 2017.