Village Financial Services to come up with IPO by September 2019

Kolkata-based NBFC-MFI Village Financial Services (VFSL) is looking to hit the capital markets with an initial public offering by September 2019.

According to Kuldip Maity, MD&CEO, VFSL, the company has already initiated the process for an IPO and has received board approval recently. Promoter holding in the MFI currently stands at around 81.4 per cent. This is over and above VFSL’s plan to raise around ₹75-100 crore through private equity route. The company has already raised close to ₹40 crore by offloading around 18.6 per cent to two PE firms, this fiscal.

The company, which has been growing its loan book by over 60 per cent annually, would require around ₹500-600 crore worth equity support to fund its growth needs over the next three years.

“We are in talks with merchant bankers and legal firms for finalising our IPO plans,” Maity told BusinessLine refusing to divulge further details.

The MFI industry, which had witnessed a substantial dip in collection rates and loan offtake in the months immediately following demonetisation, has recovered and is expected to grow further moving forward. This would attract investors to take interest in the sector, he said, explaining the company’s plan to come up with its IPO now.

Growth and diversification

VFSL is expecting to double its loan book to ₹1,500 crore by March 2019. For the quarter ended June 30, 2018, its loan book stood at ₹785 crore.

The company recently rolled out new products such as SME loans and small-ticket housing loans for its existing customers on a pilot basis. It has disbursed close to ₹5 crore worth SME loans since April this year.

“Currently we are conducting a pilot with SME and home loans in 15 of our branches in West Bengal. Based on the success of the pilot, we will look to roll this out across other geographies,” he said.

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

The MFI, which had been primarily operating in West Bengal, Bihar, Jharkhand, Odisha, Assam, Tripura, Sikkim and Uttarakhand, recently forayed into Chhattisgarh and Madhya Pradesh. Plans are afoot to enter two or three more states such as Manipur and Himachal Pradesh this fiscal.

The company, which had estimated to raise close to ₹2,200 crore by way of debts from banks and NBFCs this fiscal to fund its growth needs, has already raised close to ₹1,400 crore in the first two quarters. VFSL had raised around ₹1200 crore from banks and NBFCs in FY-18.

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