City-based micro-finance institution Village Financial Services (VFS) is in talks with merchant bankers and legal advisers for its proposed IPO next year. The exact quantum of the public offer and the extent of dilution of stake would be decided at the next board meeting.

“VFS is likely to hit the capital markets with an IPO sometime next year. It has already started the process and is in talks with merchant bankers and legal advisers in this regard,” a company official said.

VFS, which had been growing its loan book by over 60 per cent annually, has successfully completed its highest-ever monthly disbursement of Rs 192.5 crore in September 2018. The company expects to double its loan book to Rs 1,500 crore by March 2019. For the quarter ended September 30, 2018, its loan book stood at Rs 950 crore, the official said.

VFS expects to raise close to Rs 2,200 crore by way of debt from banks and NBFCs this fiscal to fund its growth needs. Of this, it has raised Rs 1,400 crore during the first six months of the year. The company plans to raise around Rs 75-100 crore through the private equity route. It has already raised Rs 40 crore by offloading around 18.6 per cent stake to two public relations firms this fiscal, the official added.

MD and CEO of Village Financial Services Kuldip Maity said, “Currently, we are conducting a pilot with SMEs (Small and Medium Enterprises) and housing loans in selected branches in West Bengal on a pilot basis. Based on the success, we will look to roll this out across other geographies.”

VFS is also likely to enter into a tie-up with Capital First for offering two-wheeler loans.

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