In the latest financial news, the well-known vehicle financing company, SK Finance Limited, has made headlines with its recent initiative to file a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The company is setting the stage for an Initial Public Offering (IPO), aiming to generate a substantial sum through the sale of equity shares, which have a nominal value of Rs. 1 each, aggregating up to Rs 2,200 crores.
Key stakeholders and potential investors are keeping a close eye on this development to understand the implications and opportunities it opens up. The IPO is a strategic move by SK Finance Limited that underscores its growth trajectory and the promising future it intends to carve out in its sector.
One of the noteworthy highlights of the IPO is the pedigree of its promoters. Rajendra Kumar Setia, Yash Setia, and Rajendra Kumar Setia HUF are well-regarded names in the industry, bringing credibility and trust to the company’s public offering.
The portfolio of the offer is diversified and includes a fresh issue of equity shares of up to Rs. 500 crores. Furthermore, there is an offer for sale (OFS) by the “Selling Shareholder” that goes up to Rs. 1700 crores. These shares are accessible at the fundamental face value of Rs. 1 for each equity piece.
For those interested in the finer details of the offer for sale, it is composed of equity shares totaling up to Rs. 180 crores by Rajendra Kumar Setia, Rs. 20 crores by Rajendra Kumar Setia HUF, and more. Notably, significant shares are held by other prominent investors such as Evolvence Coinvest I, Evolvence India Fund III Ltd, Norwest Venture Partners X – Mauritius, and TPG Growth IV SF PTE. Ltd., each planning to offer varying amounts that are substantial in their right.
With the capital generated from the fresh issue, SK Finance Limited has a clear vision of strengthening its foundation. The Net Proceeds are earmarked for enhancing its capital base, which would allow the company to meet the growing business requirements and continue its onward lending services, along with meeting general corporate purposes.
A consortium of leading financial firms has been appointed as Book Running Lead Managers for this issue. This impressive list includes Kotak Mahindra Capital Company Limited, Jefferies India Private Limited, along with Motilal Oswal Investment Advisors Limited and Nomura Financial Advisory and Securities (India) Private Limited.
On the operational front, SK Finance Limited has a proven track record dating back to its establishment in 1994. It boasts a robust operational structure, spread across two core verticals – vehicle financing and financing for Micro, Small and Medium Enterprises (MSMEs). As of December 31, 2023, the company has solidified its presence across 11 states and 1 union territory with an extensive network of 535 branches, which serves as a testament to its expansive reach and customer-centric approach.
The proposed IPO is a crucial step for SK Finance Limited as it not only provides an avenue for growth but also opens the doors for public investors to partake in its future success. The upcoming period is marked with eager anticipation as market spectators hold their breath for the final approval from SEBI and the eventual listing of the company’s securities on the stock exchanges. This public offering is poised to be a significant watershed moment for SK Finance Limited as it transitions into a publicly-traded entity and embarks on a new chapter.
