SK Finance Limited (“the Company”) established in 1994, is the fastest growing player in the vehicle financing segment and the MSME financing segment amongst the peers analysed, based on assets under management (“AUM”) CAGR in the respective segment for the period between Fiscal 2021 and Fiscal 2023 (Source: CRISIL Report) has filed Draft Red Herring Prospectus (DRHP) with SEBI for an Initial Public Offering (IPO). The company plans to raise funds through initial public offering of equity shares (face value of Rs. 1 each) aggregating up to ₹2,200 crores.
The Promoters of the Company are Rajendra Kumar Setia, Yash Setia and Rajendra Kumar Setia HUF.
The offer comprises of a fresh issue of equity shares of up to Rs. 500 crores and an offer for sale (OFS) of up to Rs. 1700 crores by the “Selling Shareholder” (The “Offer for Sale”) with face value of Rs. 1 each equity share. The offer for sale comprises of equity shares aggregating up to Rs. 180 crores by Rajendra Kumar Setia, up to Rs. 20 crores by Rajendra Kumar Setia HUF (“The Promoter Selling Shareholder”), up to Rs. 75 crores by Evolvence Coinvest I, up to Rs. 25 crores by Evolvence India Fund III Ltd, up to Rs. 700 crores by Norwest Venture Partners X – Mauritius and up to Rs. 700 crores by TPG Growth IV SF PTE. Ltd. (The “Investor Selling Shareholders”)
The company is a non-deposit taking non-banking finance company middle layer (“NBFC ML”), registered with the Reserve Bank of India (“RBI”) under Section 45IA of the Reserve Bank of India Act, 1934. The Company has been operating in two verticals, vehicle financing and financing for Micro, Small and Medium Enterprises (“MSME”), As of December 31, 2023 the company has a presence across 11 states and 1 union territory through 535 branches. Under the vehicle financing vertical, company primarily offers a secured, granular and retail loan portfolio for financing used and new commercial vehicles (excluding medium and heavy commercial vehicles) (“CVs (excluding M&HCVs)”), cars and tractors as well as new two-wheelers. Under MSME lending vertical the company primarily lends for the purpose of working capital requirements of these businesses. These loans are fully backed by assets and are offered, primarily for income generation purposes, to the mid to low-income category of customers that are predominantly self-employed, unbanked or underbanked individuals in the rural and semi-urban areas of India with limited access to organized lending channels.
The overall vehicle financing segment in India stood at approximately ₹ 11.85 trillion as of Fiscal 2023, witnessing a CAGR of around 11.07% from Fiscal 2019 and going forward, the outstanding credit is expected to grow at a CAGR of 16-18% from Fiscal 2023 to Fiscal 2027 to reach approximately ₹ 21 trillion (Source: CRISIL Report)
The Company proposes to utilise the Net Proceeds from the Fresh Issue towards augmenting the capital base to meet future business requirements of the company towards onward lending and general corporate purposes
Kotak Mahindra Capital Company Limited, Jefferies India Private Limited, Motilal Oswal Investment Advisors Limited and Nomura Financial Advisory and Securities (India) Private Limited are the Book Running Lead Managers to the issue.
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