IPO Update: Spandana receives good Anchor Investor response

The IPO of the NBFC-MFI opens for subscription. The offer was subscribed by 18 anchor investors at the upper end of the IPO price band set at Rs. 853 to Rs. 856 per share.

Major anchor investors for the Spandana Sphoorty IPO were Well Fargo Emerging Markets Equity Fund, Bajaj Allianz Life Insurance, Goldman Sachs India and ICICI Prudential Life Insurance, who lapped up 10.5 per cent of the Anchor Investor portion of the offer. Other investors included Edelweiss Alternative Investment Opportunities Trust, HSBC Global Investment Funds-Asia Ex Japan Equity Smaller Companies and Avendus Absolute Return Fund.

The IPO Committee finalised the allocation of 42,08,886 equity shares to Anchor Investors at the upper end of the IPO price band of Rs. 856 per share.

Initial Public Offering of Spandana Sphoorty includes offer for sales of approximately 93,56,725 equity shares from selling shareholders and a fresh issue of equity share aggregating to Rs. 400 crore, as per the company's Red Herring Prospectus filed with the exchanges. The selling shareholders comprise, corporate promoter Kangchenjunga Limited offloading 59,67,097 shares; followed by individual promoter Padmaja Gangireddy, who is the founder of the company; Vijaya Siva Rami Reddy, Valiant Mauritius, Helion II, Kedaara Capital and Helion. Pre-IPO, Kedaara Capital is the largest shareholder of Spandana Sphoorty with more than 60 per cent stake and Padmaja Reddy owns 20 per cent.

Spandana is a public limited company recognised as a Non-Banking Financial Company - Micro Finance Institutions (NBFC-MFI) with the Reserve Bank of India (RBI). Spandana had 694 branches across 15 states with a Gross Loan Portfolio of Rs. 3,166 crore, as of March 2018. The company plans to use the net proceeds of the fresh issue for augmenting its capital base to meet future capital requirements, while all proceeds from the offer for sale will go to each of the selling shareholders, respectively.

According to DSIJ's IPO Analysis, the offer is given a rating of 49 points, that is, 'Invest with Limited Exposure'. We believe that the offer is attractively valued and looking at the slowing economy and consumption growth, investors can subscribe to the issue with limited exposure.