Veritas Finance IPO: Veritas Finance, a retail-focused non-deposit taking non-banking finance company (NBFC), has taken a significant step toward entering the public markets by filing its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (Sebi). The company aims to raise up to Rs 2,800 crore through its Initial Public Offering (IPO), with plans to list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
This comprehensive article delves into all aspects of Veritas Finance’s IPO, including the company’s background, IPO structure, objectives, key shareholders, and potential benefits for investors. By the end, you’ll have a complete understanding of this exciting development.
Veritas Finance: Company Overview
Founded in 2015, Veritas Finance is registered with the Reserve Bank of India (RBI) as a ‘middle layer’ NBFC. The company primarily caters to micro, small, and medium enterprises (MSMEs) and self-employed individuals by offering small business loans. Over the years, Veritas Finance has diversified its portfolio to include home loans and used commercial vehicle loans, positioning itself as a key player in the financial services space.
Achievements
- Loan Growth: From FY2022 to FY2024, Veritas Finance achieved a remarkable compound annual growth rate (CAGR) of 61.76%, making it the fastest-growing NBFC among its peers (as per CRISIL MI&A).
- Loan Book: As of September 30, 2024, the company’s loan book stood at Rs 6,517 crore, with rural business loans accounting for over 72.27% of its portfolio.
- Financial Performance: For the half-year ended September 2024, Veritas Finance reported a total income of Rs 720 crore and a net profit of Rs 133 crore.
Core Services
- Small Business Loans: Aimed at MSMEs and self-employed individuals.
- Home Loans: Affordable housing solutions for rural and semi-urban areas.
- Used Commercial Vehicle Loans: Financing for pre-owned vehicles.
Highlights of Veritas Finance IPO
IPO Size and Structure
The IPO comprises:
- Fresh Issue: Equity shares worth Rs 600 crore.
- Offer for Sale (OFS): Equity shares worth Rs 2,200 crore.
The equity shares have a face value of Rs 10 each. Additionally, a portion of the IPO is reserved for eligible employees, making it more inclusive.
Use of Proceeds
The net proceeds from the IPO will primarily be used to:
- Augment Capital Base: Strengthening the company’s financial foundation to support future growth.
- Onward Lending: Expanding lending capabilities to cater to a broader customer base.
Offer for Sale (OFS) Details
Several institutional and individual shareholders are participating in the OFS. Here’s a breakdown:
| Investor Name | Stake Sale Value (Rs Crore) |
|---|---|
| Norwest Venture Partners X | 550 |
| Kedaara Capital Fund II LLP | 550 |
| British International Investment | 500 |
| Lok Capital Growth Fund | 425 |
| Growth Catalyst Partners LLC | 75 |
| Vidya Arulmany | 36 |
| P. Surendra Pai | 21 |
| Savita S. Pai | 21 |
| Sheela Pai Cole | 14 |
| Moneisha Sharad Gandhi | 8 |
Pre-IPO Placement
The company, in consultation with its Book Running Lead Managers (BRLMs), may consider a pre-IPO placement of up to Rs 120 crore. If this occurs, the amount raised will be deducted from the fresh issue.
Lead Managers and Registrars
- Book Running Lead Managers (BRLMs): ICICI Securities, HDFC Bank, Jefferies India, Kotak Mahindra Capital, and Nuvama Wealth Management.
- Registrar of the Issue: KFin Technologies Limited.
Benefits for Investors
Strong Growth Potential
Veritas Finance’s focus on MSMEs, home loans, and used commercial vehicle loans addresses significant gaps in the market. The company’s robust financial growth and diversified portfolio indicate strong potential for long-term value creation.
Attractive Market Opportunity
India’s MSME sector is a major contributor to the economy, and the demand for financial services in rural and semi-urban areas continues to grow. Veritas Finance’s expertise in these segments positions it to capitalize on these trends.
Experienced Management Team
Veritas Finance boasts a seasoned management team with extensive experience in financial services. This leadership has been instrumental in the company’s rapid growth and innovative product offerings.
Risks and Challenges
While the Veritas Finance IPO presents an attractive investment opportunity, it’s important to consider potential risks:
- Regulatory Risks: As an NBFC, the company is subject to stringent regulations by the RBI and other authorities.
- Credit Risk: The company’s focus on MSMEs and rural lending involves higher credit risk compared to urban-focused lending.
- Competitive Landscape: The NBFC sector is highly competitive, with established players like Bajaj Finance and Shriram Finance.
Veritas Finance IPO Details
| Parameter | Details |
|---|---|
| IPO Size | Rs 2,800 crore |
| Fresh Issue | Rs 600 crore |
| Offer for Sale (OFS) | Rs 2,200 crore |
| Equity Share Face Value | Rs 10 |
| Listing Platforms | BSE and NSE |
| Prominent Investors Selling Stake | Norwest, Kedaara, British Int’l |
| Use of Proceeds | Capital base, onward lending |
| Pre-IPO Placement | Up to Rs 120 crore |
| BRLMs | ICICI, HDFC, Kotak, Jefferies |
| Registrar | KFin Technologies |
| Veritas Finance Official Website | Click Here |
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Veritas Finance IPO Conclusion
The Veritas Finance IPO offers investors a chance to participate in the growth story of one of India’s fastest-growing NBFCs. With its strong financial performance, diversified portfolio, and focus on underserved markets, Veritas Finance is well-positioned for sustained growth. However, potential investors should carefully evaluate the risks associated with the company’s business model and the competitive landscape.
Whether you are a retail investor looking for promising opportunities or an institutional investor seeking exposure to the NBFC sector, the Veritas Finance IPO is worth exploring. Be sure to consult with a financial advisor to assess how this investment aligns with your portfolio goals.
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