IPO Alert: SK Finance Submitted DRHP With SEBI to Raise ₹2,200 Crore

The non-deposit-taking, non-banking finance company middle layer (NBFC ML), SK Finance Limited, has filed a draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) to raise ₹2,200 crore through an initial public offering (IPO). SK Finance Limited’s IPO is a combination of both a fresh issue and an offer for sale. The company expects to raise ₹500 crore via the fresh issue and ₹1,700 crore through the offer-for-sale.

SK Finance has appointed Kotak Mahindra Capital Company Limited, Jefferies India Private Limited, Motilal Oswal Investment Advisors Limited, and Nomura Financial Advisory and Securities (India) Private Limited as book-running lead managers (BRLMs) for the IPO. After the IPO process is completed, SK Finance’s shares will be listed on the NSE and BSE.

Purpose of SK Finance IPO

Fresh Issue

• Strengthening its capital base to meet future business requirements of its company towards onward lending.
• General corporate purposes.

Offer-For-Sale

The company will not receive any amounts raised from the offer-for-sale component. All the proceeds will be taken over by the selling shareholder.

Business Overview

Incorporated in 1994, SK Finance Limited is a non-deposit-taking non-banking finance company middle layer (NBFC ML) that operates in two verticals: vehicle financing and financing for Micro, Small, and Medium Enterprises (MSME). The company has an extensive distribution network in rural areas, aiming to provide last-mile coverage and financial support to unbanked customers.

With more than 25 years of experience, the business has created a strong underwriting procedure that is based on three main principles: insurance, intent, and income. The primary objective of the company’s first pillar, income, is lending to clients’ businesses that generate revenue. This facilitates its lending decision-making process by emphasising the worth of the collateral and the client’s capacity to generate revenue.

Looking forward, the company is focused on increasing penetration and distribution network in existing markets and diversifying into contiguous markets. It will continue to invest in technology to upgrade productivity, systems, and procedures and further the use of analytics in the business.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.