Fusion Micro Finance plans to raise up to Rs 600 crore by issuing new shares in its IPO (Initial Public Offering), which will open for sale from 2nd to 4th November. The IPO also includes an offer to sell up to 1.4 billion shares. By existing shareholders.
The price range of the IPO is pegged at Rs 350-368 and will be opened for investment by anchor investors on 1st November.
Fusion Micro Finance is the second largest NBFC-MFI in terms of AUM with total assets of Rs 7,389 crore as of June 30, behind CreditAccess Grameen.
The company has a customer base of 2.9 million, of which 93-94 percent are rural customers and 25 percent are first-time credit users. Additionally, the company is able to retain 70-75% of its borrowers at renewal, so 55-60% of its customer base is existing customers, Sachdev told BusinessLine.
Sachdev said the company plans to use IPO proceeds to raise more loans, even if it slows branch expansion to grow existing branches and improve productivity. The company added his 400 branches in fiscal year 2022, accounting for his 25% of the business as of June.
It has 966 branches and a network of 9,262 employees, spread across 19 states and 377 districts of the United States Territory.
Sachdev said three to four factors helped the company grow steadily even during the pandemic, improving its market position from 9th before the Covid outbreak to 2nd. . These include a diversified loan book, an experienced and stable management team that has been with the company for 6-10 years, robust liability management, and investments in technical capabilities.
Fusion Micro Finance began operations in 2010 in “perceived difficult markets” regions such as Uttar Pradesh and Bihar, and has since expanded to other states. Lending exposure to each state is limited to 20% and to each district to 3%.
The average ticket size is 35,000 to 36,000 rupees and the loan term is 18 to 24 months, which has already depleted most of the Covid books, said Sachdev, with 90% of current loans being It added that it was procured after April 2021. Recovery efficiency is 99%.
During the pandemic, the company restructured 2.83% of its loan book or 85,000 borrowed accounts, of which only 20% remains, Sachdev said. The net NPA ratio he had as of June 30th was 1.35%.
Bank loans accounted for 83% of the company’s borrowing profile, while NBFCs accounted for 9-10%, well below 32% in 2018. Fusion Micro Finance’s cost of funds has dropped to 10% from 15-16% a few years ago, as most of the additional borrowing is less than 10% of his, Sachdev said. increase.
Given the IPO’s equity injection and accrued earnings, the company expects an upgrade from its current ‘A-‘ rating. In the first quarter of FY23 he recorded his PAT of Rs 7.5 crore and in FY22 he recorded his PAT of Rs 2.1 crore.
Investment in technology is currently 0.3% of AUM and spending is increasing each year. However, end-to-end automation of loan processing has reduced the turnaround time for payments from his 12 days to his 4.5, Sachdev said.
The company’s operating expenses were around 5.5%, taking into account aggressive branch expansion. However, this is expected to decrease as efficiency increases, with Sachdev adding that the cost to income is 44% of his.
Fusion Micro Finance also provides emergency ‘Hospic Cash’ cover to borrowers and has a small MSME portfolio of around Rs 200 crore.