Regulatory Scrutiny Leads to Delay
The Securities and Exchange Board of India (SEBI) has put the Initial Public Offering (IPO) of Asirvad Micro Finance, a subsidiary of the listed Non-Banking Financial Company (NBFC) Manappuram Finance, on hold. The proposed IPO, aimed at raising ₹1,500 crore, has been kept in “abeyance,” with SEBI not providing further clarification.
Impact on Manappuram Finance Shares
Following the announcement, shares of Manappuram Finance experienced a significant drop, plunging by 7.45% to a low of Rs 163.40 on the Bombay Stock Exchange (BSE). The National Stock Exchange (NSE) also witnessed a notable impact, with shares trading at Rs 168.40, and a sharp increase in trading activity with one crore shares being traded, surpassing the previous session’s 77 lakh shares.
Queries Raised by SEBI
SEBI raised three queries regarding Asirvad Microfinance’s IPO. Two of these have already been resolved, with the third requiring legal opinion. This process is expected to take approximately 15 to 30 days to resolve. The IPO was planned as a fresh issue of equity shares with no offer-for-sale component. The company was also considering raising up to ₹300 crore in a pre-IPO round, which would have reduced the fresh issue size.
Financial Performance of Asirvad Micro Finance
Asirvad Micro Finance, established in 2008 with just two branches in Tamil Nadu, has significantly expanded its reach across India. As of March 31, 2023, it operates through a network of 1,684 branches in 22 states and 4 Union Territories. The company caters to 3.25 million active borrowers in its microfinance portfolio, which forms the majority of its assets under management (AUM). As of the fiscal year 2022-23, the AUM stood at Rs 10,040.89 crore, with a notable increase from Rs 7,002.18 crore in the previous fiscal year. Its profit after tax (PAT) also showed significant growth, reaching Rs 218.13 crore in FY22-23 compared to Rs 15.26 crore in FY21-22.
Future Prospects and Market Sentiment
The delay in the IPO has caused a temporary setback for both Asirvad Micro Finance and Manappuram Finance. Market analysts and investors are closely monitoring the developments, awaiting further updates from SEBI and the companies involved. The outcome of this regulatory scrutiny and the subsequent steps taken by Asirvad Micro Finance will be crucial in determining the future trajectory of both the IPO and the companies’ market standings.