Fusion Micro Finance Ipo subscription status: Fusion Micro Finance IPO subscribed 16% on Day 2

New Delhi: The initial public offering (IPO) of Fusion Micro Finance continued to receive a muted response from the investors on the second day of the bidding process. The issue was subscribed merely 12 per cent on day one.

The issue, which kicked off for subscription on Wednesday, November 02, closes for subscription on Friday, November 04. The company will be selling shares in the range of Rs 350-368 apiece to raise Rs 1,104 crore via its stake sale.

According to the data from BSE, the investors made bids for 33,42,440 equity shares or only 16 per cent compared to the 2,13,75,525 equity shares offered for the subscription by 11.00 am on Thursday, November 03.

The quota for retail bidders was subscribed by merely 19 per cent, whereas the allocation for HNI investors fetched 29 per cent bids. The portion for institutional investors was not even off the mark.

On the block, the issue 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 from their kitty 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 issue will be used towards augmenting its capital base to meet future capital requirements, the lender 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.

Brokerages remain mixed over the counter, with a few suggesting to bid for the issue, whereas others remain neutral over the company citing some risks over the issue.

“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 market cap of Rs 3,703.21 crore post issue of shares and return on net worth of 1.63 per cent,” it added, finding its valuation fairly priced.

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

The company is well-diversified and has an extensive pan-India presence with a strong rural focus. The company 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 after the industry, we recommend ‘Subscribe’ on the issue for risk appetite investors.”

Fusion 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, the company said in a filing on BSE.

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


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