Capital Markets: NBFC-MFIs set to tap the capital market

Data published by industry body Microfinance Institutions Network (MFIN) shows that the sector grew 10% annually to Rs 2.85 lakh crore at the end of March. It is expected that this fiscal year will see higher growth as business normalcy is back after the lifting of COVID related restrictions.

Sector watchers said one NBFC-MFI is looking to raise capital through an initial public offering, while others will mostly sell shares on a private placement basis.

The proposed IPO of Fusion Microfinance involves a fresh issue of shares worth Rs 600 crore. Aarohan Financial Services is currently looking to raise equity from existing investors after the expiry of its proposed IPO.

Lenders like Annapurna Finance,

microfin, Sindhuja microcredit and Uttarayan Financial Services The heads of these organizations said that they are working on selling the shares.

Bhubaneswar-based Annapurna is in the process of raising Rs 115 crore in equity, while Delhi’s Sindhuja is in the process of raising Rs 80 crore and Kolkata-based. Uttarayan 50 crore investment is planned.

Muthoot Microfin, a part of Kerala-based Muthoot Pappachan Group, is planning to raise $35 million in this fiscal, after an equity investment of $50 million last year, chief executive Sadaf Sayeed said. “We expect business growth of 30-35 per cent, so we will raise an additional loan of Rs 2,500 crore,” Saeed said.

“Raising capital became more challenging these days as the growth trajectory for most lenders got derailed after the pandemic. Also, investors tend to put their money in larger firms, while smaller companies with a portfolio of less than Rs 500 crore are struggling,” said Kartik Vishwas, managing director of Uttarayan, which has a portfolio of Rs 200 crore.

in older people,

Equity is in the midst of preferential allotment of shares. Chairman HP Singh said it made a preferential allotment of equity shares and convertible warrants worth Rs 225 crore, against which Rs 75 crore was paid in January and the balance amount would be paid within 18 months.

The captains of industry, however, regret that Small Industries Development Bank of IndiaWhich maintains the Indian Microfinance Equity Fund, is not making fresh equity investments.

NBFC-MFIs had raised equity between them to the tune of Rs 2832 crore in the last financial year, which was about 15% higher than the previous fiscal, showing steady traction in credit growth in the sector, while repayment collections pre-Covid level is back.

He had raised Rs 2476 crore in the financial year 2011. MFIN data shows that the total equity of NBFC-MFIs increased to Rs 21,419 crore at the end of March 2022.

These lenders received total debt funding of Rs 47,931 crore during FY 2012, which is 18% as compared to borrowings in the previous financial year.

The entire microfinance sector caters to 5.8 crore unique borrowers through 11.3 crore loan accounts. The Gross Loan Portfolio of NBFC-MFIs stood at Rs 96,561 crore, registering a year-on-year growth of 19.4%.

“The microfinance industry has shown good progress during Q4 FY22 on the momentum built in Q3. Portfolio quality has improved significantly compared to the end of Q1 FY2012, when the second wave of covid caused widespread stress in all parts of the country,” said Alok Mishra, CEO, MFIN.