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19 Nov 2024
Tamil Nadu-based MSME lender Veritas Finance Private Ltd is preparing to file draft papers for an initial public offering (IPO) aimed at raising over ₹3,000 crore by November, according to sources familiar with the plan. Backed by prominent investors such as Multiples PE, Kedaara Capital, and Norwest Venture Partners, the non-banking finance company (NBFC) is working with investment banks including ICICI Securities, Kotak Mahindra Capital, Jefferies, and HDFC Bank for the IPO process.
Sources indicated that Veritas plans to submit its draft red herring prospectus (DRHP) before the end of November, incorporating financial results for the first half of FY25. The company is targeting a market debut by Q4 of FY25, depending on regulatory approvals and timely filing.
The IPO is expected to primarily consist of a secondary share sale by the company's existing investors. Veritas, founded in 2015 by D. Arulmany, a veteran in the lending industry with over 25 years of experience, had a loan portfolio of ₹6,091 crore, operating through 387 branches, and serving close to 2 lakh customers across India as of June 30, 2024. The company's product portfolio includes micro-business loans, working capital loans, loans for used commercial vehicles, home loans, and loans against property.
Of the total IPO, approximately ₹2,000 crore will come from an offer for sale by existing investors, while the company aims to raise between ₹750 and ₹1,000 crore in primary capital to support future growth. The offer-for-sale portion could increase based on market conditions and investor demand at the time of the share sale.
Veritas Finance has not provided specific details but noted that it regularly evaluates capital-raising options in response to market conditions. Any decisions regarding the IPO will be shared at the appropriate time, according to a company spokesperson.
In terms of financial performance, Veritas saw its loan disbursements rise to ₹3,702 crore in FY24, compared to ₹2,245 crore in FY23, according to a Care Ratings report. Assets under management (AUM) grew by 62% in FY24 to ₹5,724 crore, up from ₹3,534 crore the previous year. The company’s core MSME loans made up 61% of the AUM as of March 31, 2024, while working capital loans expanded by 77%, contributing 11% to the AUM. Loans against property accounted for 14% of the AUM, and home loans increased from 3% in FY23 to 14% in FY24.
Veritas Finance’s profit surged to ₹245 crore in FY24, up from ₹176 crore in the prior year, while revenue also rose significantly to ₹1,124 crore from ₹682 crore in FY23.
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