Fusion Micro Finance IPO to raise Rs 600 crore. Here are the details

Fusion Micro Finance is set to conduct its IPO process between November 2 and November 4, 2022, to raise about Rs 600 crore through a fresh issue and also sell about 1.4 crore of existing shares. Here's more about the IPO, what the company does and what its financials look like.

First, the important details:

• IPO size: Fresh issue worth Rs 600 crore and the sale of about Rs 1.4 crore (ie. 1,36,95,466) existing shares of Rs 10 per share.  
• IPO share price range: Rs 350 to Rs 368 per share
• Number of shares you need to buy when you subscribe for 1 lot: 40 shares 
• The minimum investment for a retail investor (like you and me): 1 lot - Rs 14,720
• Maximum investment for a retail investor: 13 lots - Rs 191,360. (Since retail investors can only invest up to Rs 200,000)
• 50% of the IPO quota is reserved for Qualified Institutional Buyers (QIB) ie banks and mutual funds, 15% is reserved for High Net-worth Individuals (HNIs) and 35% is for retail-category investors. 

Second, the IPO's important dates:

• The IPO process begins on November 2, 2022, and will close on November 4, 2022
• The share allotment will be decided on November 10, 2022, and you will receive shares in your Demat account by November 14 if you are allocated shares by the company.
• In case you do not get any allotment, you will be refunded your money on November 11, 2022. 
• The shares will list on the NSE and BSE on November 14, 2022.

Third, what's the business into?  Fusion Micro Finance Ltd is in the business of providing financial services to women entrepreneurs who belong to the economically and socially deprived section of society. Fusion Micro Finance provides women with financial support and acquaints them with managing finances by disseminating Financial Literacy services as well. 

The bank's business runs on a joint liability group-lending model, in which a small number of women form a group of five to seven members and guarantee one another's loans. The bank has been in the business since 1994 and as of June 30, 2022, they are in the top 10 NBFC-MFIs in India in terms of Assets Under Management. Fusion Micro also had the third-fastest gross loan portfolio growth of 44% among the top NBFC-MFIs in India between the financial years 2018 and 2021, according to CRISIL.

Fourth, what will they do with the IPO money? Though there are no detailed descriptions of the use of the IPO funds, Fusion Micro Finance will have to augment the capital base of the company once the IPO is listed.

Fifth, is the company healthy? (Rs in crores):  Devesh Sachdev, Creation Investments Fusion, LLC, Creation Investments Fusion II, LLC and Honey Rose Investment Ltd are the promoters of the company. And here's what their company looks like:

The company seems to be consistently witnessing an increase in profits and revenues but has also borrowed a lot of loans. But since their total assets are also increasing, their net worth has been consistently rising too which makes it one of the good factors to consider before investing.  

The company is growing steadily because of a diversified loan book, an experienced and stable management team that has been with the company for 6-10 years, robust liability management, and their investment in technological capabilities.

As a company that would be a competitor to other listed microfinance companies like Bandhan Bank and Ujjivan Small Finance Bank, would you invest in another one?