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Fusion Micro Finance Limited IPO is live now. Should you invest?

Fusion Micro Finance Limited IPO is live now. Should you invest?

Fusion Micro Finance Limited IPO

Fusion Micro Finance Limited IPO is live now. Should you apply? Find out here.

In this article

About Fusion Micro Finance Limited IPO

Incorporated in 1994, Fusion Micro Finance Ltd is engaged in providing financial services to women entrepreneurs belonging to the economically and socially deprived section of society. The company’s responsibilities are not restricted merely to financial support, but also to acquaint the clients to manage their finances by disseminating financial literacy to them.

Fusion Micro Finance Ltd is one of the youngest companies among the top 10 NBFC-MFIs in India in terms of AUM as of June 30, 2022.

The company has achieved significant footprint across India, where it has extended its reach to 2.90 million active borrowers which are served through its network of 966 branches and 9,262 permanent employees spread across 377 districts in 19 states and union territories in India, as of June 30, 2022.

The company’s business runs on a joint liability group-lending model, wherein a small number of women form a group (typically comprising five to seven members) and guarantee one another’s loans.

As of June 30th 2022, and March 31th 2022, 2021 and 2020, our total AUM was ₹7,389.0 crores, ₹6,785.9 crores, ₹46,37.8 crores and ₹3,606.5 crores, respectively.

Issue Details of Fusion Micro Finance Limited IPO

  • IPO open from 02 Nov – 04 Nov 2022
  • Face value: ₹10
  • Price band: ₹350 to ₹368
  • Market lot: 40 shares
  • Minimum investment: ₹14,720
  • Listing on: BSE and NSE
  • Offer for sale: ₹1,103.99 Cr (Fresh Issue of ₹600 Cr + OFS of ₹503.99 Cr)
  • Registrar: Link Intime India Private Ltd
  • Promoters: Devesh Sachdev, Creation Investments Fusion, LLC, Creation Investments Fusion II, LLC and Honey Rose Investment Ltd

Offer Breakup

IPO Object

The company proposes to utilise the net proceeds of the fresh issue towards funding the following objects:

  • The company proposes to utilize the net proceeds of the IPO towards augmenting its capital base.
  • The company expects to receive the benefits of listing the equity shares on the stock exchanges and enhancement of its brand name amongst its existing and potential customers and creation of a public market for its equity shares in India.

IPO Strength

  • The company is well diversified and has a pan-Indian presence with 6,351 employees in 326 districts across 18 states of India.
  • The company  has a technologically advanced operating model.
  • It has a stable and experienced management team supported by marquee Investors.
  • They leverage their network, domain expertise and data to enhance their product offerings.
  • The company continues to invest in technology to enhance operational efficiency and optimize costs.

IPO Risk

  • Every Microfinance company faces inherent risks due to the category of customers it lends to. There is no other form of lending taking place.
  • Volatility in interest rates could have an adverse effect on net interest income and net interest margin.
  • An increase in the level of NPAs or provisions may adversely affect business, financial condition, results of operations and cash flows.
  • There are certain risks that come hand in hand with a large number of branches and employees that are being handled by the bank.
  • There are outstanding legal proceedings against the company’s directors.

Peer Companies

  • Ujjivan Small Finance Bank Limited
  • Bandhan Bank Limited

Financial Data

Period EndedTotal AssetsTotal RevenueProfit After Tax
31-Mar-20 4,239.99 730.3169.61
31-Mar-21 5,837.93 873.0943.94
31-Mar-22 7,290.48 1,201.3521.76

Also Read: Sustainable Investing in India: ESG Investments

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