India's PE-backed Au Financiers files for IPO

The IPO will see Au sell 53 million shares held by existing shareholders, according to a prospectus. Pricing of the shares, representing a 19% stake, has not been announced. Au’s PE investors will see their collective interest in the company drop from 47% to 31% after the offer, with Warburg Pincus selling 14.8 million of its 60 million shares, IFC selling 7.6 million of 30 million, ChrysCapital exiting 11.3 million of 22.5 million and Kedaara divesting 10.8 million of 22 million shares.

Currently Warburg Pincus is the largest single investor in Au, having committed $50 million alongside IFC in 2012. The deal provided a partial exit for Motilal Oswal Private Equity (MOPE), one of the company’s early investors, which first invested INR200 million ($4 million) in 2008 and participated in another round for INR600 million along with IFC and other backers in 2010. MOPE exited its remaining stake last year. ChrysCapital and Kedaara each bought a 10% stake in 2013 and 2014, respectively.

Founded in 1996, Au primarily serves low and middle-income Indian individuals and businesses that lack access to formal banking and finance channels. It reported revenue of INR10.5 billion for the year ended March 2016, up from INR6.9 billion the year before. Over the same period profit rose from INR2.1 billion to INR3.8 billion.

The company received a final license from the Reserve Bank of India (RBI) last year to open a small finance bank, and was the first to do so of the 10 NBFCs that received in-principle approval from the RBI in 2015 after cutting its foreign holding to 49% last year as required. To support its banking plans, Au last year sold its mortgage arm Au Housing to a joint venture between Kedaara Capital and Partners Group for a reported INR9.5 billion.

Several other PE-backed small finance bank license applicants have gone public recently, including microfinance institutions (MFIs) Ujjivan Financial Services and Equitas Holdings. Public listings are seen by some companies as an effective way to reduce an institution’s foreign holding to qualify for the license while gaining public recognition and capital to support the new venture.

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• Topics
• South Asia
• Financials
• IPO
• India
• NBFCs
• Exit
• Warburg Pincus Asia
• ChrysCapital Management
• Kedaara Capital
• IFC