Belstar Microfinance to file for IPO soon

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Mathoot Finance Its microfinance arm – Belstar Microfinance Ltd – has begun discussions about an initial public offering. exclusively speaking to business lineKalpana Sankar, managing director of Belstar Microfinance, said a committee has been set up to work on the IPO. “The IPO Committee will appoint bankers for this issue soon.”

A few days ago, Muthoot Microfin, the microfinance arm of Muthoot Pappachan Group, popularly known as Muthoot Blue, submitted a draft herring prospectus for an IPO.. The company is looking to raise ₹1,350 crore through a combination of new releases and sale.

Belstar MFI is among the leading MFI players in Tamil Nadu, with a loan book of Rs 6,227 crore in FY23. The IPO is aimed at a valuation of Rs 3,000-4,000. And based on the fiscal year ’23 financials, it’s about 3 to 4 times price to book value. This appears to be a premium over Fusion Microfinance’s IPO, which floated in November 2022 and is worth about 2.7x the reservation price. “We aim to file a public file by November,” Sankar said.

Belstar’s IPO is expected to be a combination of an offer for sale and a new issue, although the ratio is still a work in progress. Belstar MFI was incorporated in 1988 as a non-banking corporation and subsequently acquired in 2009 by Kalpana Sankar, the current Managing Director of the company, to provide credit to economically weaker borrowers.

Then, as part of Muthoot Finance’s diversification strategy, it acquired Belstar in 2017 and currently owns about 53 per cent share of the promoter. Belstar has an AA- rating from Crisil and is among the few microfinance companies benefiting from the bond market. It closed the 23rd financial year with a net profit of Rs. 130 crore and total assets performing 2.6 per cent.