SEBI approves IPO of IndoStar Capital

IndoStar Capital received the market regulator's approval to float Rs 2,000 crore Initial Public Offering (IPO).

IndoStar Capital had filed for Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in February. According to the DRHP, the IPO consists of a fresh issue aggregating up to Rs. 700 crore and an offer for sale of up to 2 crore equity shares offered by selling shareholder.

The company being an NBFC is subject to RBI's capital adequacy regulations. The company has to have a regulatory minimum CRAR of 15 per cent, while as of September 30, 2017, IndoStar's CRAR was 36.10 per cent on a standalone basis. The company plans to utilise the net proceeds from the fresh issue to augment capital base and meet future capital needs. Also, it will benefit from the visibility gained by the company's brand name following the equity market listing.

IndoStar is RBI registered non-banking finance company (NBFC) which lends primarily to Small and Medium Enterprises (SME). The company operates through four segments, corporate lending, SME lending, housing financing and vehicle financing. Financially, IndoStar's net worth was Rs. 1,903 crore as on March 31, 2017, with a CAGR of 15 per cent over 6 years, while the PAT was Rs. 211 crore in FY17 with CAGR of 32 per cent over last 6 years.

The company's peers include L&T Finance Holdings, Piramal Enterprises, Aditya Birla Capital, Capital First, Shriram Transport Finance, Sundaram Finance, Cholamandalam Investment and Finance and Repco Home Finance.