Spandana Sphoorty Financial Limited IPO
Overview of the Company
Spandan is a Sanskrit word and it means Response. As Spandana was born in response to a problem, the Organisation was named as Spandana. Spandana is a public limited company registered with Reserve Bank of India (RBI) as an NBFC MFI. Started in 1998, within five years, by 2003, it grew to the largest Microfinance Institution in India and 6th largest across the globe. In its peak, Spandana had 1,856 Branches with a presence in 10 states and a workforce of over 13,500 employees.
Spandana was founded by Mrs. Padmaja Reddy in 1998 as a Society which was later transformed into an NBFC and subsequently as NBFC MFI. Mrs. Reddy, the Promoter and Managing Director of Spandana prior to founding Spandana used to work with an NGO in Andhra Pradesh. This NGO used to help poor people to build their houses, provide safe drinking water, sanitation, health education, etc. The NGO used to raise grants from different funding agencies and implement these activities.
They offer income generation loans under the joint liability group model, predominantly to women from low-income households in Rural Areas. As of March 31, 2018, they were the fourth largest NBFC-MFI and the sixth-largest amongst NBFC-MFIs and SFBs in India, in terms of AUM. The average ticket size of the loan is Rs. 26000 and most of these loans are income generating.
Company went to CDR in 2010
In October 2010, the MFI industry was severely impacted due to external regulatory action, as the government of the formerly unified Andhra Pradesh promulgated the AP Microfinance Ordinance 2010, which enforced several restrictions on the operations of MFIs.
This severely impacted the company collections and the consequent cash-flow shortage impacted their ability to service the debt, which in turn impaired their growth and profitability. The lenders referred them to the corporate debt restructuring (“CDR”) mechanism of the RBI to develop a plan to restructure our borrowings and revive our business.
They agreed on a CDR plan with their lenders, which allowed them to get cash-flow relaxations to enable them to continue working towards portfolio diversification, process improvement, and cost rationalization. These measures helped us turn the operations profitable from the year ended March 31, 2014.
Post their exit from CDR in March 2017, they increased the lender base, diversified borrowings to new banks and NBFCs and also issued NCDs in the capital markets which results into a reduction in Average Effective Cost of Borrowing to 13.82% for Fiscal 2018 from 16.31% for Fiscal 2017.
Interaction with Management
Objects of the Spandana Sphoorty Financial Limited IPO:
Spandana Sphoorty Financial Limited IPO Details:
|Open Date:||Aug 05 2019|
|Close Date:||Aug 07 2019|
|Total Shares:||1.40 Cr|
|Face Value:||₹ 10 Per Equity Share|
|Issue Type:||book building|
|Issue Size:||1200.94 Cr.|
|Lot Size:||17 Shares|
|Issue Price:||₹ 853-856 Per Equity Share|
|Listing Date:||Aug 19 2019|
Promoters And Management:
Financials of Spandana Sphoorty Financial Limited IPO:
Comparison With Peers: