Fusion Micro Finance IPO Day 1: The initial public offer (IPO) of Fusion Micro Finance was subscribed 3 per cent in the afternoon session today. The issue received bids for 7.08 lakh shares against an IPO size of 2.13 crore shares amounting to a subscription of 3 per cent at 12:09 pm on the first day of bidding today. The initial public offering (IPO) of microlender Fusion Microfinance has opened for subscription on Wednesday, November 2, 2022, and the issue, with a price band of Rs 350-368 a share, will conclude on Friday, November 4, 2022. The company on Tuesday said it has raised a little over Rs 331 crore from anchor investors ahead of its initial share sale.
Fusion Micro Finance IPO dates
The offer will open for bidding on November 2, and the closing date would be November 4. On November 1, the company will announce the amount mopped up via anchor book that is open for a day.
Fusion Micro Finance IPO Price Band
The price band for the public issue has been fixed at Rs 350-368 per share. The face value of the equity share is Rs 10 each.
Investors can bid for a minimum of 40 shares and in multiples of 40 shares thereafter. With this, retail investors can make a minimum investment of Rs 14,720 per lot. At the maximum, they can buy shares worth Rs 1,91,360 for 13 lots.
Half of the offer is reserved for qualified institutional buyers (QIBs), 15 percent for non-institutional investors, and the balance 35 percent for retail investors.
Fusion Micro Finance IPO Objective
The proceeds from the fresh issue will be utilised by the company for augmenting its capital base, while the OFS money will go to the selling shareholders.
Fusion Micro Finance IPO Issue Size
The company will raise Rs 1,106 crore through its maiden public offer, comprising a fresh issue of shares worth Rs 600 crore, and an offer-for-sale (OFS) of 1.36 crore shares by the promoters and investors.
Promoters Devesh Sachdev, Mini Sachdev, Honey Rose Investment, and Creation Investments Fusion LLC will offload 35.5 lakh equity shares via the OFS. And investors Oikocredit Ecumenical Development Cooperative Society U A, and Global Impact Funds SCA SICAR will sell 66.06 lakh shares and 35.39 lakh shares via the OFS, respectively.
Fusion Micro Finance IPO Financials
The micro finance lender had recorded profit of Rs 21.75 crore for financial year ended March FY22, down from Rs 43.94 crore in the previous year, impacted by higher impairment on financial instruments.
The net interest margin (NIM) also declined to 8.39 percent from 9.22 percent, but net interest income (NII) jumped to Rs 560.6 crore from Rs 430.8 crore earlier.
Pre-provision operating profit climbed to Rs 393 crore in FY22, against Rs 277.5 crore in the previous financial year.
On quarterly basis, the company reported a massive 17 times year-on-year (YoY) growth in profit at Rs 75.1 crore for Q1 FY23, led by higher other income and lower impairment on financial instruments.
Link Intime India Private Ltd is the registrar and ICICI Securities Limited, CLSA India Private Limited, IIFL Securities Ltd and JM Financial Limited are merchant bankers to the IPO. Ahead of its IPO, the company had on Tuesday allotted 89,99,943 equity shares to 17 anchor investors at Rs 368 apiece, aggregating to Rs 331.20 crore.
Fusion Micro Finance is engaged in providing financial services to women entrepreneurs belonging to the economically and socially deprived section of the society.
Fusion Micro Finance IPO GMP
The grey market premium (GMP) of the IPO stood at Rs 40, according to IPOwatch.
Fusion Micro Finance IPO: What Should Investors Do?
“Although this company’s margins are now in declining mode and it is facing risk due to the category of borrowers it serves, an increase in the level of NPA’s could also be a concern for the company. Secondly, the company demands a price-book (P/B) multiple of 1.8 on a post IPO basis, where its peers like creditAccess command a P/B of 3.3. Thus, considering all the factors, we recommend a Subscribe rating for this issue, but only for high-risk investors with a longterm view,” said Swastika Investmart.
“Company’s profitability was declining in past years due to COVID impact. From FY2023, they are expecting to show recovery in profits. On valuation front, it is available at P/BVPS of 2.28x in FY2022 whereas industry average stands at 2.5x which appears fairly priced. Thus, we recommend to subscribe for listing gains,” said Canara Bank Securities.
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