Bhartiya Samruddhi Finance Limited (BSFL), a microfinance institution (MFI) promoted by Vijay Mahajan, is planning to raise about Rs 75 crore through non-convertible debentures (NCDs) in a couple of months.
BSFL chief executive officer Sajeev Viswanathan said the Small Industries Development Bank of India would subscribe to the NCDs, which would later be listed on a stock exchange. “The face value and other details are being worked out. We are in talks with a rating agency for this instrument,” he told Business Standard.
The NCDs will be treated as subordinated debt and qualify for Tier-II capital of the company. “We might go in for an initial public offering (IPO) in 2013,” he said.
An IPO often is an exit route for private equity companies and, therefore, a factor for most MFIs to go public. Last month, SKS Microfinance became the first MFI to file a draft red herring prospectus with the Securities and Exchange Board of India (Sebi) for an IPO. Spandana and Share, Hyderabad-based MFIs, hope to hit the capital market over the next 12 months.
BSFL would require around Rs 1,500 crore during the financial year 2010-11. Of this, the MFI is likely to raise at least Rs 150 crore (10 per cent) through new sources like commercial papers and mutual funds. It has about Rs 600 crore sanctioned from banks.
Last week, Matrix and a few others invested about Rs 118 crore in the company. “We will use Rs 12 crore of this for clearing debt and the rest will be infused into the company to meet its capital needs,” he said.
The company has an outstanding of Rs 1,000 crore and a networth of Rs 205 crore with a capital adequacy ratio of 15 per cent. With the new capital infusion of Rs 75 crore, its networth will go up to Rs 300 crore and it will be allowed to have an outstanding of up to Rs 2,400 crore.
"BSFL will look to assign loans worth Rs 500 crore, about 20 per cent of the total outstanding, to banks by the end of March 2011,” Viswanathan said, adding it assigned loans worth Rs 275 crore to banks during 2009-10.
The company would also increase its operations in urban areas and already had pilots in Hyderabad, Indore and Delhi. The effort is aimed at reaching out to 100,000 clients across 62 cities that the Centre has identified under the Jawaharlal Nehru National Urban Renewal Mission and other projects.
Viswanathan said about 400 people would be added every month at field and management levels to take the number to 10,000 by the end of this fiscal. BSFL now has about 6,000 such staff. In three years, it is looking at becoming a 25,000-strong employee MFI.
Among others, water and sanitation, solar lighting and biogas products would form part of its loan portfolio. The average loan size for these will be Rs 10,000 to Rs 15,000.
Viswanathan said BSFL was keen on increasing its noncredit revenues from 15 per cent (Rs 35 crore) to 25 per cent by 2013 through insurance, savings, remittances, business development and agriculture services.
