Manappuram Finance shares fall 8% as SEBI puts Asirvad Microfinance IPO on hold

Shares of listed NBFC Manappuram Finance tumbled up to 8% in trade Wednesday (January 10) after Securities and Exchange Board of India (SEBI) put the initial public offer (IPO) of subsidiary firm Asirvad Microfinance on hold. At 10:45 am, the scrip was trading 4.67% lower at ₹168.30 apiece on the NSE.

The microfinance company had filed preliminary papers with the capital market regulator to garner ₹1,500 crore through its public offer. However, SEBI's decision to put Asirvad Microfinance's IPO in abeyance will trigger a delay in its listing.

Below are the details, as per sources, as to why SEBI has kept the IPO in abeyance:

- 3 Queries were raised by SEBI on Asirvad MFI IPO, 2 already resolved

- The query is common, not expected to affect IPO process

- 2 Queries have already been responded to and resolved

- Third query requires legal opinion, which is being obtained

The third query could take about 15 to 30 days to resolve, sources have confirmed to CNBC-TV18. However, Manappuram Finance is yet to respond to CNBC-TV18's query.

The maiden public issue is completely a fresh issue of equity shares with no offer-for-sale (OFS) component.

The company also planned to raise up to ₹300 crore in a pre-IPO round. If such placement is completed, the fresh issue size will be reduced. Going by the draft papers, proceeds from the issue will be used to augment the capital base of the company to meet future business requirements.

Asirvad Microfinance, which began its journey in 2008 with just two branches in Tamil Nadu, has expanded its reach across India over the years. It has presence across 22 states and 4 UTs through a network of 1,684 branches as on March 31, 2023. It caters to 3.25 million active borrowers in the microfinance portfolio that constitutes a majority of its assets under management. It also caters to loan against gold and MSME loans.

In fiscal 2022-23, Asirvad Microfinance had an assets under management (AUM) of ₹10,040.89 crore as against ₹7,002.18 crore in fiscal 2021-22.

JM Financial, Kotak Mahindra Capital Company, Nomura Financial Advisory and Securities (India) Private Ltd, and SBI Capital Markets are the book-running lead managers to the issue. The equity shares of the company will be listed on the exchanges.