SK Finance was founded in 1994 and has over 28 years of experience in used car financing
Jaipur-based non-banking financial company (NBFC) SK Finance has started preliminary discussions to conduct an initial public offering (IPO) next year and raise around $250-300 million (Rs 2,092-2,511 crore), multiple industry sources said you know, told Moneycontrol.
The company, formerly called Ess Kay Fincorp, is backed by the likes of TPG Growth and Norwest Venture Partners and recently brought Motilal Oswal Alternates on board.
“SK Finance wants to unlock value through a listing that would provide investors with a partial exit and help raise growth capital,” said one of the people cited above.
A second person familiar with the planned IPO told Moneycontrol that it would be a combination of a primary and secondary share offering.
“Pitches will be held this week with a number of global and domestic investment banks to select the consortium of advisors. Some pitches have already taken place earlier. A pre-IPO round could also be planned, but no final call has been taken yet,” a third person told Moneycontrol.
All three people mentioned above spoke to Moneycontrol on condition of anonymity.
When contacted, TPG declined to comment.
Inquiries to SK Finance and Norwest Venture Partners remained unanswered. This article will be revised as we receive responses from these companies.
SK Finance: The next NBFC exchange contender
SK Finance Limited was founded in 1994 by Rajendra Kumar Setia and his family members. The portfolio includes financing for used and new commercial vehicles, tractors, two-wheelers and business loans.
The company's website says it has more than 9.3 million customers and more than 9,500 employees, with a presence in over 490 offices in 12 states and one union territory.
According to a Crisil Ratings note on SK Finance on September 15, SK Finance has over 28 years of experience in the used car financing segment and has over time evolved from a direct selling agent to a full-fledged NBFC.
The company had assets under management of Rs 7,937 crore of Rs 223 crore as on June 30, 2023, with total income of Rs 1,314 crore in FY2023, Crisil Ratings' note added.
IPO action in the NBFC space and more
The latest listing in the NBFC space was by Federal Bank's subsidiary FedBank Financial Services, which is backed by private equity firm True North. The company recently raised Rs 1,092 Crores and had a muted debut on November 30.
Also Read: IPO-targeting NBFC Avanse, backed by Warburg Pincus, aims to raise Rs 1,000 crore fresh
Earlier this year, SBFC Finance made a solid Dalal Street debut with its listing on August 16 at a premium of 44 per cent. The company's share price rose from Rs 82/share on the trading day to Rs 88.20/share at the close of trading on December 5.
Other public issues are also on the agenda in the financial services sector.
On October 17, Moneycontrol reported that Hero FinCorp, the financial services arm of India's largest two-wheeler maker Hero Moto Corp, has shortlisted a consortium of eight investment banks to launch a mega IPO in 2024.
Also Read: Hero MotoCorp's arm Hero FinCorp picks 8 i-Banks for mega IPO worth around Rs 4,000 crore
On November 30, we reported that IPO-bound Avanse Financial Services was again looking for funds, 10 months after raising Rs 800 crore from private equity firm Kedaara Capital. Warburg Pincus holds a majority stake in the education-focused NBFC.
Also Read: Fedbank Financial Services posts subdued performance on listing day, closes just above issue price of Rs 140
Ashwin Mohan is Editor (Deals) at Moneycontrol and leads coverage of M&A, private equity and equity market transactions. He hosts the video show Deal Central and tweets at @ashwinmohansays. He has previously worked with ET NOW, CNBC TV-18 and The Times of India.
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