Sebi puts SK Finance's Rs 2,200-cr IPO in abeyance

New Delhi: Capital markets regulator Sebi has kept in 'abeyance' the proposed initial share sale of vehicle finance and business loan-focused non-bank lender SK Finance.

Without disclosing the reason, Securities and Exchange Board of India (Sebi) said "issuance of observations (has been) kept in abeyance" with regard to the IPO of SK Finance, an updated showed on the regulator's website on Monday.

The Jaipur-based lender had filed its preliminary papers with the capital markets regulator in May this year.

According to the draft papers, the initial public offering (IPO) of SK Finance is a combination of a fresh issue of equity shares worth Rs 500 crore and an offer for sale (OFS) of up to Rs 1,700 crore by promoters and investor shareholders.

As part of the OFS, Norwest Venture Partners X-Mauritius and TPG Growth IV SF PTE Ltd will offload shares worth Rs 700 crore each, while Evolvence Coinvest I will divest shares to the tune of Rs 75 crore and Evolvence India Fund III Ltd will sell shares worth Rs 25 crore.

Additionally, promoters - Rajendra Kumar Setia and Rajendra Kumar Setia HUF - will offload shares aggregating to Rs 180 crore and Rs 20 crore, respectively, according to the draft red herring prospectus (DRHP).

SK Finance plans to utilise proceeds from the fresh issue for augmenting the capital base to meet future business requirements of the company towards onward lending and for general corporate purposes.

The NBFC has been operating in two verticals -- vehicle financing and financing for Micro, Small and Medium Enterprises (MSMEs). It has a presence across 11 states and one Union Territory through 535 branches as of December 2023.

According to a Crisil report, the overall vehicle financing segment in India stood at around Rs 11.85 lakh crore as of fiscal 2023, marking a compound annual growth rate (CAGR) of around 11 per cent from fiscal 2019. Going forward, the report said, the outstanding credit is expected to grow at a CAGR of 16-18 per cent from fiscal 2023 to fiscal 2027 to reach Rs 21 lakh crore.

Earlier this year, SK Finance had raised Rs 1,328 crore from investors. Motilal Oswal Private Equity pumped in Rs 415 crore for a minority stake in the NBFC.

Kotak Mahindra Capital Company Ltd, Jefferies India Private Ltd, Motilal Oswal Investment Advisors Ltd and Nomura Financial Advisory and Securities (India) Private Ltd are the book-running lead managers to the issue.

The equity shares of the company are proposed to be listed on the NSE and BSE.