SEBI Puts Jaipur-Based SK Finance IPO on Hold

The Securities and Exchange Board of India (SEBI) has paused the initial public offering (IPO) of SK Finance, a non-banking financial company (NBFC) specializing in vehicle and business loans.

SEBI did not provide specific reasons for this decision, only stating that the "issuance of observations (has been) kept in abeyance," according to an update on its website.

SK Finance, headquartered in Jaipur, had filed its draft papers with SEBI in May. The proposed IPO includes a fresh issue of equity shares worth ₹500 crore and an offer for sale (OFS) totaling up to ₹1,700 crore by promoters and investor shareholders.

Under the OFS, Norwest Venture Partners X-Mauritius and TPG Growth IV SF PTE Ltd plan to sell shares worth ₹700 crore each. Evolvence Coinvest I will divest ₹75 crore worth of shares, and Evolvence India Fund III Ltd will sell shares worth ₹25 crore.

Promoters Rajendra Kumar Setia and Rajendra Kumar Setia HUF will sell shares worth ₹180 crore and ₹20 crore, respectively, as per the draft red herring prospectus (DRHP).

The proceeds from the fresh issue are intended to strengthen SK Finance’s capital base for future lending activities and general corporate purposes.

SK Finance operates in vehicle financing and MSME financing, with 535 branches across 11 states and one Union Territory as of December 2023.

A Crisil report indicates that India's vehicle financing segment was valued at approximately ₹11.85 lakh crore in fiscal 2023, with an annual growth rate (CAGR) of around 11% from fiscal 2019. The outstanding credit in this segment is expected to grow at a CAGR of 16-18% from fiscal 2023 to fiscal 2027, reaching ₹21 lakh crore.

Earlier this year, SK Finance raised ₹1,328 crore from investors, including ₹415 crore from Motilal Oswal Private Equity for a minority stake in the NBFC.

The IPO’s book-running lead managers are Kotak Mahindra Capital Company Ltd, Jefferies India Private Ltd, Motilal Oswal Investment Advisors Ltd, and Nomura Financial Advisory and Securities (India) Private Ltd. The shares are proposed to be listed on both NSE and BSE.

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