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Fusion Micro Finance IPO subscription status: Fusion Micro Finance IPO subscribed 2% in 90 mins of bidding process

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New Delhi: The Rs 1,104-crore initial public offering of Fusion Micro Finance received a muted response from investors during the first hour of the bidding process.

The issue, which kicked off for subscription on Wednesday, closes for subscription on Friday. The company is selling its shares in the range of Rs 350-368 apiece.

According to the data from BSE, investors made bids for 4,83,680 equity shares or only 2% compared to the 2,13,75,525 equity shares offered for the subscription by 11.30 am.

The quota for retail bidders was subscribed 4%, whereas the allocation for HNI investors fetched only 2% bids. The portion for institutional investors was not off the mark yet.

The IPO consists of the issuance of fresh equity shares worth Rs 600 crore, whereas existing shareholders and promoters of the company will offload 1,36,95,466 equity shares via offer for sale (OFS).

Incorporated in 1994, Fusion Micro Finance is engaged in providing financial services to women entrepreneurs belonging to the economically and socially deprived section of society.

The net proceeds from the fresh issue will be used towards augmenting its capital base to meet future capital requirements, the lender has said.

It has 2.90 million active borrowers with a network of 966 branches and 9,262 permanent employees spread across 377 districts and 19 states and union territories.

Brokerage firms remain mixed over the counter.

“It has a technologically advanced operating model and access to diversified sources of capital and effective asset liability management,” said Anand Rathi Research, which has a ‘subscribe’ rating on the issue.

“Fusion Micro Finance is available at the upper price of the band at 1.91x P/BV with a market cap of Rs 3,703.21 crore post issue of shares and return on net worth of 1.63%,” it said, adding that valuation looks fairly priced .

The company has reserved 50% of shares of qualified institutional buyers, whereas non-institutional investors will get 15% of shares. The remaining 35% shares have been allocated to the retail bidders.

The company is well-diversified and has an extensive pan-India presence with a strong rural focus. It has access to diversified sources of capital and effective asset-liability management with a robust underwriting process and risk management policies, said Hem Securities.

“Company’s stable and experienced management team supported by marquee investors indicates decent fundamentals with strong growth potential in future,” it added.

“The issue seems reasonably priced at the current level. But looking at the industry, we recommend ‘subscribe’ on the issue for investors with a high-risk appetite.”

Merger Micro Finance mobilized Rs 331.2 crore through anchor book ahead of its IPO launch by allotting 89.99 lakh equity shares at Rs 368 apiece to 17 investors.

CLSA India, , are the lead managers to the issue, whereas Link Intime India has been appointed as the registrar to the issue.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)