Sebi puts SK Finance’s Rs 2,200-crore IPO in abeyance
The Securities and Exchange Board of India (Sebi) has decided to postpone the initial public offering (IPO) of SK Finance, a non-bank lender that specializes in auto financing and business loans. The statement was posted on Sebi’s website on Monday, without citing any specific reasons for the postponement.
Background on SK Finance.
SK Finance, based in Jaipur, filed its initial registration papers with Sebi in May of this year. The IPO plans included a fresh issue of equity shares worth Rs 500 crore and an offer for sale (OFS) of up to Rs 1,700 crore by the company’s promoters and investor shareholders.
Details of the Offer for Sale
The key investors planning to sell their shares are:
- Norwest Venture Partners X-Mauritius and TPG Growth IV SF PTE Ltd: Each will offload shares worth Rs 700 crore.
- Evolvence Coinvest I: Will divest shares worth Rs 75 crore.
- Evolvence India Fund III Ltd: Will sell shares worth Rs 25 crore.
Additionally, the promoters, Rajendra Kumar Setia and Rajendra Kumar Setia HUF, will sell shares worth Rs 180 crore and Rs 20 crore, respectively.
Purpose of the IPO
The proceeds from the new share issuance will be used to expand SK Finance’s capital base in order to meet future business needs, especially for onward lending and general corporate reasons.
Business Operations
SK Finance operates in two main areas:
- Vehicle Financing
- Financing for Micro, Small, and Medium Enterprises (MSMEs)
As of December 2023, the company has a network of 535 branches across 11 states and one Union Territory.
Industry Outlook
According to Crisil, the vehicle financing industry in India was valued at around Rs 11.85 lakh crore in fiscal 2023. Since fiscal 2019, this sector has experienced a compound annual growth rate (CAGR) of approximately 11%. Looking ahead, the report anticipates that outstanding credit in this area will rise at a CAGR of 16-18% between fiscal 2023 and fiscal 2027, reaching Rs 21 lakh crore.
Recent Fundraising
Earlier this year, SK Finance secured Rs 1,328 crore from investors, demonstrating its capacity to secure significant investment.
Conclusion
While Sebi has postponed SK Finance’s IPO, the company’s operations and development potential remain promising. Investors and stakeholders will closely observe the Sebi’s next measures pertaining this IPO.
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