NBFCs put IPO plans on fast track, could raise over Rs 30,000cr

Time of India

5 days ago

Mumbai : Non-bank lenders are expected to rush
initial public offerings
(IPO) to benefit from an easier regulatory regime, lower interest rates, an improving credit cycle, and increasingly positive
market sentiment
that has taken the broadest equity gauges to their highest in nearly nine months.
There are several NBFCs that already have IPO approvals from the Securities and Exchange Board of India (Sebi). But they were seeking a better market opportunity, and are likely to speed up listing plans.
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Vehicle and business loan company
SK Finance
, education loan focused
Avanse Financial
and
Credila Financial
and MSME loan company
Veritas Finance
are expected to raise an aggregate amount of ₹13,500 crore, bankers said.
ET Bureau
There is also a likely bumper IPO from the $400-billion market cap salt-to-steel Tata Group as its long incubated NBFC, Tata Capital, plans to raise ₹17,200 crore in what could be among the largest public issues this fiscal.
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'Conditions are more favourable for NBFCs that have lined up for the capital markets because of the regulatory change of stance, ample liquidity in the banking system, and a favourable rate cycle,' said Ajay Saraf, executive director, ICICI Securities, one of the bankers appointed to manage the ₹2,200 crore SK Finance issue and the bumper Tata Capital sale.
Analysts and bankers said the central bank's reduction in risk weights for bank lending to NBFCs in this fiscal along with the cumulative 100 basis points cut in the benchmark repo rate in 2025 calendar so far should address the funding challenge NBFCs faced in 2024.
One basis point is a hundredth of a percentage point.
'The worst of the NBFC credit cycle is also behind us. The elevated credit costs that we saw in 2024 are easing, so it is fair to expect that in the second and third quarter onwards we could see some capital raising from the NBFCs,' said Shreepal Doshi, lead analyst, NBFCs, Equirus Securities.
To be sure, most of the IPO-bound NBFCs are backed by private equity funds, which are looking to fully or partially exit the companies. SK Finance counts Norwest Venture Partners, TPG Growth, Baring Private Equity India and Motilal Oswal's PE arm — MO Alternate Investment Advisors as investors.
Credila Financial, promoted by the erstwhile HDFC, now counts EQT and ChrysCapital as it's majority investors, while Kedaara Capital, Norwest Venture Partners, British International Investment (BII), Lok Capital and Growth Catalyst are investors in Veritas.