Fusion Microfinance is entering the market on Wednesday, Nov 2 with plans to raise Rs 600 crore through the issuance of fresh equity and Rs 500 crore through an offer-for-sale from its promoters. The price band for the Initial Public Offer (IPO) has been fixed at Rs 350 – 368 per equity share of face value Rs 10 each. With a loan portfolio of Rs 7389 crore as of 30 June 2022, the Gurgaon-based non-banking finance company (NBFC) operates mainly in the Northern states of Uttar Pradesh, Madhya Pradesh and Bihar. It has a small presence in Gujarat, with a loan portfolio of Rs 150 crore.
Addressing a news conference in Ahmedabad on Monday, managing director & CEO Devesh Sachdev said that when Fusion started operations in 2010, 80% of the Indian population had no bank accounts and most microfinance companies operated in South India. “Our initial effort was to serve the Bottom of the Pyramid in the Northern states, which were perceived to be difficult markets. We have gradually expanded to 19 States over the years.”
With 9,262 employees, Fusion currently has 966 branches spread across 377 districts. In Gujarat, it is present in Ahmedabad, Vadodara and Limbdi. Most of Fusion’s customers are rural women and the average loan size is Rs 35,000, with a tenure of 18-24 months.
Addressing the news conference Fusion’s Chief Financial Officer Gaurav Maheshwari said the company has steadily improved its cost of borrowing, something that is crucial to profitability. “Five years ago, 36% of our borrowings were from NBFCs. That has now come down to 9%. Today, 83% of our borrowings are from banks, of which the largest chunk of 9% comes from SBI. As a result, we have reduced our cost of borrowing by 6%.”Taking into account the IPO equity infusion and accrued profits, the company is hopeful of an upgrade from the current rating of ‘A-’. It posted a PAT of ₹75 crore for Q1FY23 and ₹21 crore for FY22.