Fusion Microfinance IPO Details & Analysis

Fusion Microfinance IPO Details & Analysis

Fusion Micro Finance Limited was one of the most recent additions to India’s top ten NBFC-MFIs in terms of assets under management (AUM) as of March 31, 2002. Furthermore, CRISIL experienced the third quickest gross loan portfolio growth of 44 per cent among India’s top NBFC-MFIs throughout 2018 and 2021. Fusion Microfinance IPO will hit the market in October 2021.
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About Fusion Microfinance IPO

Fusion Micro Finance Limited was formed to generate possibilities for women at the bottom of the pyramid. They accomplish this by offering financial services to unserved and underserved women in rural and peri-rural regions across India.

Fusion Micro Finance Limited, headquartered in Kolkata, has submitted Draft Red Herring Prospectus(DRHP) to the Securities and Exchange Board of India(SEBI) for an initial public offering (IPO) of 600 Crore & 2,19,66,841 equity shares on August 10 2021.

Their network and services, they think, have increased access to formal credit at reasonable rates, therefore improving the lives of their clients in rural India.

The Offer includes 600 Crore value fresh equity shares, and There is an offer for sale (OFS) of 2,19,66,841 equity shares by the promoters mentioned in the DRHP.

They think they have accomplished this by adhering to their main growth pillars of client centricity, deliberate geographic diversification with a rural focus, implementing innovation for development, and a focus on nurturing and developing their people over time.

Footprints

Since their beginning in 2010, They’ve focused on organic geographic expansion, emphasising strategic control of state concentration risk by growing into underserved rural regions with considerable development potential.

Consequently, as of March 31, 2021, they had established a strong presence in India, serving 2.12 million active borrowers through their network of 725 branches and 6,351 permanent staff spread over 326 districts and 18 states and union territories in India.

They think that their large number of active borrowers and branch network puts them in a solid position to expand and extend their reach.

Business Model

They can provide “last-mile” access to Their clients in remote rural regions because of their vast and geographically varied distribution network.

For the financial year 2021, they were ranked second among the top ten NBFC-MFIs in India in terms of least portfolio density from the most significant state.

They had the minor gross loan portfolio per district and per client among the top ten NBFC-MFIs in India, displaying better expansion and reduced risk per client, according to CRISIL.

Despite their expansion over the years, they have been able to preserve low levels of AUM concentration per state due to their careful control of state focus.

 
ParticularsFor the year/period ended ( in Cr.)
31-Mar-2131-Mar-2031-Mar-19
Total Assets5,837.934,239.993,610.52
Total Revenue873.09730.31497.05
Profit After Tax43.9469.6150.67

Basic and Diluted Earnings Per Share


Financial PeriodBasic EPS (in INR)Diluted EPS (in INR)Weight
Financial Year 20215.565.493
Financial Year 202010.4710.322
Financial Year 201910.4910.351
Weighted Average9.669.53

Objects of the Issue

  • Prepayment/repayment of all or a portion of the company's outstanding borrowings to be availed on a consolidated basis.
  • To meet common corporate objectives.

Basis of the Offer

The following are some of the qualitative considerations and critical strengths that contribute to determining the Offer Price:
  • Their pan-India footprint is well-diversified and broad.
  • With a strong rural focus, they have demonstrated execution skills.
  • access to a variety of funding sources and efficient asset-liability management
  • Risk management rules and a thorough underwriting procedure
  • The operational model that is technologically advanced
  • The company is led by a solid and experienced management team that major investors back.

Fusion Microfinance IPO Peer Comparison

S. No.Face ValueCompany NamePE
110Credit Access Grameen Limited78.53
210Spandana Sphoorty Financial Limited29.94
310Bandhan Bank22.27
410Ujjivan Small Finance Bank582.00
510Suryoday Small Finance Bank Limited159.73

Fusion Microfinance IPO Details

IPO Opening DateOctober 2021
IPO Closing DateOctober 2021
Issue TypeBook Built
Face Value10 per  share
IPO Price0 to 0 per equity share
Market Lot0
Min Order Quantity0
Listing AtBSE, NSE
Issue Size–
Fresh Issue600 Crore
Offer for Sale2,19,66,841 equity shares

Basis of Allotment

Type% of OfferBasis of Allotment
Qualified Institutional Buyer50
Roughly 
equivalent
Non-Institutional Investor15
Roughly 
equivalent
Retail35The minimum level of 1 lot, based on availability, for every shareholder.

Fusion Microfinance IPO Risk

  • The impact of the Coronavirus disease on their business in the future is unknown and impossible to predict.
  • An increase in our nonperforming assets (NPAs) or provisions might hurt their company.
  • Any disruption in their financing sources or an increase in finance expenses might hurt their liquidity.
  • Due to their vast number of branches and extensive network of operations, they may encounter a variety of hazards.
  • Certain sections of the NBFC-ND-SI Master Directions place restrictions on their operations.
  • Noncompliance with statutory AML and KYC standards may expose them to extra responsibility, as well as hurt their business and image.

Other Threats

  • Any breakdown, shortcoming, or security breach in their information technology systems might hurt their operations.
  • Any reduction in their credit ratings might limit their access to financing and debt markets, hurting their company.
  • Concerns regarding the financial parameters of their loans may hurt their reputation.
  • Cash accounts for a substantial percentage of their client collections and disbursements, exposing them to specific operational risks.
  • They’ve engaged in related-party transactions that might lead to a conflict of interest.
  • Their Directors are the subject of ongoing judicial actions. Any adverse outcomes might hurt their business.

Promoters

  • Devesh Sachdev
  • Creation Investments Fusion LLC
  • Creation Investments Fusion II LLC
  • Honey Rose Investment Ltd

Promoter Holding


Pre Issue Share Holding85.21%
Post Issue Share Holding
For More information visit us at TAXAJ

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