Sebi puts Malappuram Finance's arm Asirvad Micro Finance IPO on hold

New Delhi: Capital markets regulator Sebi has kept in "abeyance" the proposed Rs 1,500 crore Initial Public Offering (IPO) of Asirvad Micro Finance, a subsidiary of listed NBFC Manappuram Finance.

However, the Securities and Exchange Board of India (Sebi) did not clarify further.

Reacting to the development, shares of Manappuram Finance plunged as much as 7.45 per cent to a low of Rs 163.40 apiece on the BSE on Wednesday.

Asirvad Micro Finance had filed preliminary papers with Sebi in October 2023 to garner Rs 1,500 crore through an IPO.

As per the draft red herring prospectus (DRHP), the public issue was purely a fresh issue of equity shares with no offer for sale (OFS) component.

Without disclosing the reason, Sebi said "issuance of observations (has been) kept in abeyance" with regard to the IPO of Asirvad Micro Finance, an update on the regulator's website showed on Wednesday.

The details were updated as of January 5.

The issuance of an observation letter by Sebi implies its go-ahead for an IPO. Sebi usually gives its observations on IPO papers in 30 days.

Going by the draft papers, proceeds from the issue were proposed to be used to augment the capital base of the company to meet future business requirements.

Asirvad Micro Finance, which began its journey in 2008 with just two branches in Tamil Nadu, has expanded its reach across India over the years. It has a presence across 22 states and 4 Union Territories through a network of 1,684 branches as of March 31, 2023.

As of March 31, 2023, it caters to 3.25 million active borrowers in the microfinance portfolio that constitutes a majority of its assets under management. It also caters to loans against gold and provides loans to MSMEs.

For fiscal 2022-23, Asirvad Micro Finance had assets under management (AUM) of Rs 10,040.89 crore as against Rs 7,002.18 crore for fiscal 2021-22. Its profit after tax (PAT) jumped to Rs 218.13 crore in FY22-23 as compared to Rs 15.26 crore in FY21-22.

JM Financial, Kotak Mahindra Capital Company, Nomura Financial Advisory and Securities (India) Private Ltd, and SBI Capital Markets are the book-running lead managers to the issue.