Muthoot Finance’s microfinance arm -- Belstar Microfinance Ltd -- has begun discussions around an initial public offering. Speaking exclusively to businessline, Kalpana Sankar, Managing Director of Belstar Microfinance, said a committee has been set up to work on the IPO. “The IPO committee will appoint bankers for the issue soon.”
A few days ago, Muthoot Microfin, the microfinance arm of the Muthoot Pappachan group, popularly known as Muthoot Blue, filed a draft herring prospectus for IPO. The company is looking to raise Rs 1,350 crore through a mix of fresh issue and offer-for-sale.
Belstar MFI is among the leading MFI players in Tamil Nadu, with a loan book of Rs 6,227 crore in FY23. The IPO is targeted at a valuation of Rs 3,000–4,000 crore. Based on FY23 financials, it works out to a 3–4x price-to-book value. This appears to be at a premium to Fusion Microfinance’s IPO, which was rolled out in November 2022 and valued at around 2.7x price-to-book. “We are targeting to file for public issue by November,” said Sankar.
Belstar’s IPO is expected to be a mix of offer-for-sale and fresh issue, though the proportion is still in the works. Belstar MFI was incorporated in 1988 as a non-bank and was later acquired in 2009 by Kalpana Sankar, the company’s present MD, to provide credit to economically weaker borrowers.
Subsequently, as part of Muthoot Finance’s diversification strategy, it acquired Belstar in 2017 and presently holds around 53 per cent stake in the capacity of a promoter. Belstar enjoys a rating of AA- from Crisil and is among the few MFI companies to tap the bond market. It closed FY23 with net profit of Rs 130 crore and gross performing assets of 2.6 per cent.