Bangalore: Sachin Bansal’s Navi Technologies is set to file its draft document with the market regulator for an initial public offering (IPO) of Rs 4,000 crore later this week, sources informed.
According to the current plans of the company, it is planning to launch its IPO in June. Bansal, who launched Flipkart in 2007 and exited the firm in 2018 following the Walmart deal, holds a 97% stake in the firm. The public issue will be entirely through issue of fresh shares, with no offer-for-sale (OFS) component.
This means that Bansal will not sell shares to investors in the planned IPO, sources familiar with the matter told ET. Besides them, Ankit Agarwal, co-founder and chief financial officer at Navi, and Paresh Sukhtankar, former deputy managing director of HDFC Bank, hold stake in the Bengaluru-based firm. Sukhtankar is also a Board Observer at Navi.
Bansal, who has invested Rs 4,000 crore of his capital in Navi, is expected to retain majority control in the firm even after the IPO.
“The company feels that it has made progress in the personal loan business and has grown exponentially. Now, they (Navi) want to turbocharge and scale it. They will need funds for solvency needs in financial services businesses,” said a person aware of the IPO plans.
Sources said Navi is tapping public markets to feed its fast-growing businesses in personal loans and microfinancing (Chaitanya Credit), apart from its own mutual fund business. Navi acquired Chaitanya in September 2019.
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While Navi is looking to raise Rs 4,000 crore in an IPO, it will raise at least double the amount through public debt later this year for its aggressive growth plans, with a loan book of Rs 20,000 crore over the next two years. construction is included. years. Sources said the company plans to raise Rs 15,000 crore as debt from the public markets over the next two years.
“In order to grow its lending business, which already accounts for 90% of its revenue, Navi will have to raise more debt from the markets. The IPO could help Navi, as it could instill confidence among investors because of its performance. And the metrics will be publicly revealed,” said one of the people above.
Navi is said to have around 30 lakh monthly active users, and disbursed personal loans worth Rs 500 crore in February. Another person mentioned above said, “If you include microfinance and housing loans, the disbursement will be around Rs 900-1,000 crore per month.”
A Navi spokesperson declined to comment on its IPO plans and business growth.
Currently, the Navi group includes personal and home loan platform Navi Finserve; Mutual Fund Platform Navi Asset Management Company; Health Insurance Vertical Navi General Insurance; and microfinance and lending institution Chaitanya Micro Finance.
In early 2020, Chaitanya Micro Finance applied for a universal bank license from the Reserve Bank of India (RBI), but has yet to obtain the license.
This comes after customers expressed concern over privacy leaks and the Enforcement Directorate (ED) sent notices for alleged violation of Foreign Exchange Management Act (FEMA) guidelines during his tenure at Flipkart. Bansal had moved the Madras High Court in September against the ED action.
Sources say it is unlikely that Chaitanya will get the license anytime soon, and certainly not before the proposed IPO. Although the company remains in touch with the RBI, the central bank is yet to give it a banking license.
Recently, Saurabh Jain, Chief Executive and MD of Navi Mutual Fund, who joined in February 2021, resigned to assume a larger role within the Navi Group. He was replaced by Hari Shyamsundar, who is expected to take over as CEO, subject to approval.
Navi brings on three new board members – WhatsApp India head Abhijit Bose; Shripad Nadkarani, an early investor and board member of Paperbot; and Usha Narayanan, former PwC partner. Sources said more independent directors would join the board ahead of the IPO. Anand Sinha, former deputy governor of the Reserve Bank of India, is already on the board as an independent director.
On February 8, ET reported that Navi Technologies has converted itself into a public entity to prepare for the public listing. The company has hired bankers, including ICICI Securities, BofA Securities and Axis Capital, to help with the issue of its public listing.
Navi’s current loan book is close to Rs 3,600 crore in size. This includes home loans, personal loans and microfinance loans. While personal loans are a big vertical for the company, it is trying to accelerate its home loan business as well.
News of Navi’s IPO plan comes as India’s listed new-age companies have seen their value fall due to a variety of reasons, most recently Russia’s invasion of Ukraine. Life Insurance Corporation of India has also applied for an IPO, but the Ukraine-Russia crisis could stall the huge public offering.
Other startups such as Delhivery and FarmEasy have got SEBI nod for their IPOs, but they are now unlikely to launch this financial year. But Navi is plowing ahead. “Something will happen in terms of public issues – that will happen and one can’t wait endlessly. Navi has an aggressive plan to scale up business and is comfortable with the June deadline, as long as the current scenario changes.” Let there be no dramatic changes in the world,” a source told ET.
Navi Technologies turned profitable in the financial year 2020-21 (FY21), reporting a consolidated profit of Rs 71 crore. The company’s earnings also saw an increase as revenue grew to around Rs 780 crore in FY2011 from Rs 221 crore in FY10. However, the company may not be able to maintain its profitability in FY22 due to investments on growth and technology, said sources aware of the discussions.
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