Ujjivan Financial Services Ltd, the Bangalore-based microfinance institution that has been given permission by RBI to launch into a small finance bank, has raised over Rs.312.4 crore from a private placement round and the initial public offering (IPO) is likely to be sometime in two months from now. The fund-raisers have valued Ujjivan Microfinance at around Rs.2,150 crore.
Otherwise, Ujjivan has disbursed loans worth Rs.4,328 crore as of March 2015 and has a network of 423 branches. Ujjivan’s investors include International Finance Corp. (IFC), the UK’s CDC, venture capital firm Sequoia Capital and private equity firm CX Partners. CDC has 12.69% stake, followed by IFC and CX Partners, which own 11.84% and 10.69%, respectively.
The first round of funding before IPO was raised from 33 domestic investors including mutual funds, insurance firms, family offices and high net-worth individuals (HNIs). The institutional investors included HDFC Standard Life Insurance Co. Ltd, Shriram Life Insurance Co. Ltd, Bajaj Allianz General Insurance Co. Ltd, Kotak Mahindra Old Mutual Life Insurance Co. Ltd and mutual fund Sundaram Asset Management Co. Ltd, who have collectively funded Rs.214 crore in this round with HDFC Standard Life alone giving away Rs.75 crore.
The share price has been fixed at Rs.205 per share, which is 2.1 times more. The draft IPO filing said the company plans to issue Rs.1,500 crore IPO offer and now that the first round raised Rs.312 crore, it is well within the target of raising Rs.1,200 crore more from the IPO route. Otherwise, Ujjivan has to exit several of its foreign investors whose stake should come down from 88% to 49% to become a SFB.
Now the FIIs such as World Bank arm International Finance Corp. (IFC), the Netherlands’ development finance institution FMO, will also sell their stake to exit from Ujjivan. Before March 31, Ujjivan has to comply with the norm of holding not more than 49% of foreign equity.
Ujjivan and Chennai-based Equitas have so far applied papers for an IPO before becoming small finance banks.