Ujjivan Financial Services, an Indian provider of microloans and life insurance, recently conducted its initial public offering (IPO), generating INR 3.6 billion (USD 54 million) from the sale of newly issued shares. In addition, it locked in INR 2.7 billion (USD 41 million) in new funds from unidentified anchor investors ahead of the IPO [1].
The issuance of 30 million shares was oversubscribed approximately 41 times. The valuation of Ujjivan at the IPO price of INR 210 (USD 3.16) was 1.6 its estimated 2017 book value, roughly the ratio of Equitas (1.7), the Indian microfinance lender that went public in April 2016 [1] [2].
The IPO lowers foreign shareholding in Ujjivan to approximately 45 percent from 77 percent, bringing the firm in line with the Reserve Bank of India’s (RBI’s) guideline that foreign institutional investor ownership not exceeding 49 percent for publicly traded firms. Foreign investors that sold their shares in the IPO were Elevar Equity, India Financial Inclusion Fund, International Finance Corporation, Mauritius Unitus Corporation, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden, Sarva Capital, Wolfensohn Capital Partners and Women’s World Banking Capital Partners.
Ujjivan plans to use the IPO proceeds to complete its transformation into a small finance bank during the first quarter of 2017 under the license it got from RBI on September 26, 2015 [3].
As of March 2015, Ujjivan served approximately 2.2 million customers through 470 branches across 209 districts. As of the same date, Ujjivan reported total assets of INR 39.4 billion (USD 592 million), return on assets of 2.8 percent, return on equity of 16.4 percent and a gross loan portfolio of INR 32.7 billion (USD 491 million).
By Kevin van den Brink, Research Associate
About Ujjivan Financial Services
Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of March 2015, Ujjivan served approximately 2.2 million customers through 470 branches across 209 districts. As of the same date, Ujjivan reported total assets of INR 39.4 billion (USD 592 million), return on assets of 2.8 percent, return on equity of 16.4 percent and a gross loan portfolio of INR 32.7 (USD 491 million). In May 2016, Ujjivan Financial Services went public, raising USD 95 million in new capital.
Sources and Additional Resources
[1] Economic Times, News, “Ujjivan Financial Services IPO Stages Stellar Show Subcribed 40.57”
[2] MicroCapital, News, “Indian Microfinance Lender Equitas Holdings Goes Public, Raising 330m”
[3] MicroCapital, News, “Reserve Bank of India (RBI) Awards Small Finance Bank Licences to 10 Microfinance Institutions (MFIs)”
MicroCapital Universe Profile: Ujjivan Financial Services
MicroCapital Universe Profile: Elevar Equity
MicroCapital Universe Profile: International Finance Corporation
MicroCapital Universe Profile: Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) Development Bank
Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/
Similar Posts:
- MICROCAPITAL BRIEF: Regulator Licenses ADIB Egypt to Open Shariah-compliant Subsidiary, ADI Microfinance
- MICROCAPITAL BRIEF: Agents for Impact Disburses $8m from Invest in Visions (IIV) to Microfinance Institutions Digamber of India, Imon of Tajikistan
- MICROCAPITAL BRIEF: ADB Issues Local-currency Bond in Mongolia to Finance Invescore Lending to Women-led MSMEs
- MICROCAPITAL BRIEF: Peruvian Fintech Lender Prestamype Concludes $5m Equity Funding Round Led by Acumen Subsidiary ALIVE Ventures, Oikocredit
- MICROCAPITAL BRIEF: SBFC Raises $18m from Amansa for On-lending to Small Businesses, Households in India
