Fusion Micro Finance IPO Last Day: The initial public offering of Fusion Micro Finance recieved a lukewarm response from investors as only 29 per cent of the offer was subscribed on Thursday. The initial public offering (IPO) of microlender Fusion Microfinance opened for subscription on 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. 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 Subscription Status
Investors have, so far, bought 66.36 lakh equity shares against an offer size of 2.13 crore shares, data available on exchanges show.
Non-institutional investors, or high-networth individuals, have bid for 65 percent of the allotted quota of shares, while retail investors bought 33 percent of their portion.
The portion set aside for qualified institutional buyers (QIBs), who play an important role in an IPO, has been subscribed just 0.004 percent—bids have come in for 26,960 shares against a quota of 59.56 lakh shares.
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
As per market observers, Fusion Microfinance shares are commanding a premium (GMP) of Rs 5 in the grey market today.
Fusion Micro Finance IPO: Should You Invest?
The New Delhi-based microfinance company claims to provide financial services to underserved women across India in order to facilitate their access to greater economic opportunities. The company uses a joint liability group (JLG) model, developed by Grameen Bank in Bangladesh, to give loans of up to ₹50,000.
“With a low base of Rs 7,389 crore in AUM, the runway for accelerated growth has decent scope over the next three-five years,” Nirmal Bang said.
Despite Covid, Fusion managed its asset quality well by restricting gross non-performing assets and net NPA below the 6 percent and 3 percent mark, respectively, over FY21 and FY 22, the brokerage said.
As of June FY23, gross NPA was at 3.7 percent and net NPA at 1.4 percent, driven by robust underwriting processes, it said.
The healthy portfolio indicators resulted in a good return on assets (ROA) of 4.2 percent and return on equity (ROE) of 21.8 percent for Q1FY23.
“Fusion is well placed to deliver ROA and ROE in excess of 4 percent and 20 percent on a sustained basis barring any unforeseen event which hampers the microfinance industry every few years,” Nirmal Bang said.
“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.
ICICI Securities, CLSA India, JM Financial and IIFL Securities are the merchant bankers to the issue. Link Intime India Private Ltd is the registrar to the initial share sale.
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