SK Finance files DRHP with SEBI to raise ₹2,200-crore via IPO; details here

SK Finance has filed preliminary draft papers with capital markets regulator Securities and Exchange Board of India (SEBI) to garner ₹2,200 crore through an initial share sale. The proposed initial public offer (IPO) is a combination of a fresh issue of equity shares worth ₹500 crore and an offer for sale (OFS) of up to ₹1,700 crore by promoters and investor shareholders, according to the draft red herring prospectus (DRHP) filed by the company.

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SK Finance IPO Details

The promoters of the company are Rajendra Kumar Setia, Yash Setia and Rajendra Kumar Setia HUF. As part of the OFS, Norwest Venture Partners X-Mauritius and TPG Growth IV SF PTE Ltd will offload shares worth ₹700 crore each, Evolvence Coinvest I will divest shares to the tune of ₹75 crore and Evolvence India Fund III Ltd will sell shares worth ₹25 crore. Rajendra Kumar Setia and Rajendra Kumar Setia HUF will offload shares aggregating to ₹180 crore and ₹20 crore, respectively, according to the draft paper.

The vehicle finance and business loans-focused non-bank lender plans to utilise proceeds from the fresh issue for augmenting the capital base to meet future business requirements of the company towards onward lending and for general corporate purposes.

Kotak Mahindra Capital Company Ltd, Jefferies India Private Ltd, Motilal Oswal Investment Advisors Ltd and Nomura Financial Advisory and Securities (India) Private Ltd are the book-running lead managers (BRLMs) to the public issue.

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SK Finance Company Details

Earlier this year, SK Finance raised ₹1,328 crore from investors. The Jaipur-based company has been operating in two verticals -- vehicle financing and financing for Micro, Small and Medium Enterprises (MSMEs). It has a presence in 11 states and one union territory through 535 branches as of December 2023.

The company is a non-deposit taking non-banking finance company middle layer (NBFC ML), registered with the Reserve Bank of India (RBI). Under the vehicle financing vertical, company primarily offers a secured, granular and retail loan portfolio for financing used and new commercial vehicles (excluding medium and heavy commercial vehicles), cars and tractors as well as new two-wheelers. 

Under MSME lending vertical the company primarily lends for the purpose of working capital requirements of these businesses. These loans are fully backed by assets and are offered, primarily for income generation purposes, to the mid to low-income category of customers that are predominantly self-employed, unbanked or underbanked individuals in the rural and semi-urban areas of India with limited access to organized lending channels.

According to a CRISIL report, the overall vehicle financing segment in India stood at around ₹11.85 lakh crore as of fiscal 2023, marking a compound annual growth rate (CAGR) of around 11 per cent from fiscal 2019 and going forward, the outstanding credit is expected to grow at a CAGR of 16-18 per cent from fiscal 2023 to fiscal 2027 to reach ₹21 lakh crore.