SKS Microfinance is looking to raise around Rs 1,500 crore through its proposed initial public offering.

With a price band of Rs 650-700 a share, the first microfinance company to go public will offer around 5-10 per cent discount to the retail investors, senior investment bankers told Financial Chronicle.

The company is selling 1.68 crore equity shares in the IPO. This includes fresh issue of 74.45 lakh shares and 93.46 lakh shares on offer for sale by existing shareholders, including Sequoi Capital.

“The company made a private equity offering to Tree Line of Singapore at Rs 636 a share few months back. The IPO pricing will be more than that,” a senior banker said. According to him, the results for the fourth quarter of previous financial year and the first quarter of this year have been excellent and, hence, the company is hoping to get higher valuation.

“The sale to Tree line Asia Master Fund (Singapore) was a cashless transaction,” Vikram Akula, founder of India’s largest microfinance institution by market share, said. According to the company, none of the existing shareholders will exit the company in the offering that begins on July 27 and they will stay locked in for next three years, post-IPO.

The company is looking at offering around 5-10 per cent discount to woo retail investors.

Another initiative to get more retail investors to subscribe the issue is to have two separate closings for QIBs and the retail investors. While the issue closes on July 30 for the QIBs, for retail investors it closes on August 2.

“The idea is to give more time to retail investors to see how the response has been from QIBs and take a decision,” another investment banker handling the issue said.

The fresh issuance and sale of shares by the existing shareholders will mean a dilution of 21.6 per cent of the paid-up capital of the company after the IPO.

The company is also looking at roping in an anchor investor. “The company is talking to domestic institutional investors, mutual funds and insurance companies to come on board as an anchor investor,” a senior investment banker said.

“The price band for the issue will be announced on July 27 after which the offer opens for anchor investors and qualified institutional bidders,” Akula said. This issue has been graded by CARE as CARE IPO Grade 4 indicating above average fundamentals.

snehashah

@mydigitalfc.com