Fusion Microfinance Submits DRHP with SEBI for its IPO

New Delhi-based microlender Fusion Microfinance has filed papers for its initial public offering with market regulator SEBI. The company aims to raise about Rs. 1,900 crores through its IPO.

Fusion Microfinance is the second microfinance company after Arohan Financial Services, which is going for IPO in 2021.

About Fusion Microfinance

Fusion Microfinance is a micro-lending firm that provides funds to women living in rural and semi-urban areas across India. It aims to provide its customers access to better economic opportunities. It utilises the joint liability group model, designed by Grameen Bank of Bangladesh to provide loans of up to Rs. 50,000. The company was launched in 2010.

It has 725 branches, 6,351 employees across 326 districts of 18 states and union territories. Fusion has been serving 2.12 million active customers as of March 2021. Warburg Pincus, a major global private equity player, invested Rs. 520 crores in Fusion Microfinance in December 2018.

What are the Objectives of Fusion Microfinance IPO?

Fusion Microfinance wishes to utilise the proceeds from its initial public offering for the following purposes:

• To meet future capital requirements
• To enhance its capital base

Here’s an Insight into Fusion Microfinance IPO

The IPO will be a combination of fresh issues worth Rs. 600 crores with an OFS (offer for sale) of 21.97 million shares by the current investors and shareholders.

The offer for sale includes:

• Up to 6.32 million shares by Honey Rose Investments
• About 1.3 million shares by Devesh Sachdev
• Nearly 4 million equity shares by Creation Investments Fusion LLP
• About 3.54 million shares by Global Financial Inclusion Fund
• Up to 6.61 million shares by Oikocredit Ecumenical Development Co-operative Society UA

In addition to this, Mini Sachdev, another major shareholder, will sell off about 0.2 million on equity shares.

A Close Look at the Company Finances

Investors interested in subscribing to Fusion Microfinance IPO should be aware of the key financial details of the company. Here is a detailed overview of the financial performance of Fusion Microfinance:

• For the fiscal year 2021, the net interest income of the company stood at Rs. 430.89 crores as opposed to Rs.312.30 crores last year.
• Net profit for the same period was Rs. 43.94 crores against Rs. 69.61 crores in the previous year.
• The Gross NPA ratio of Fusion Microfinance is at 5.51% this year, in comparison to 1.12% last year.
• The company had, in May 2021, raised Rs. 88 crores from Bank im Bistum Essen (BIB) as its first commercial borrowing. BIB is a German cooperative bank.

Final Words

For the fiscal year 2020 – 2021, Fusion Microfinance has a total asset of Rs. 46.38 billion under management.

There isn’t much information available about the timetable of the IPO. Those interested in subscribing to this IPO can keep an eye on the Angel One platform for more information.

 

Frequently Asked Question

1. Who are the lead managers of the issue?

ICICI Securities, IIFL Securities, CLSA India, JM Financial are the lead managers.

2. What is the price band of Fusion Microfinance IPO?

It is not yet disclosed.

3. Can I use UPI to apply for Fusion Microfinance IPO?

Yes, you can.