R Sridhar, chief executive officer of Indostar Capital Finance Ltd. rings the bell at the company’s listing ceremony. (Source: BloombergQuint)

IndoStar Capital Finance Plans To Focus On Retail Lending Post Listing

Non-banking finance company Indostar Capital Finance Ltd., which listed on the BSE today at a premium, will focus on growing the retail segment as it looks to change its business mix.

Most of the proceeds from the initial public offering will be used to grow this segment, R Sridhar, the chief executive officer of the company, told BloombergQuint in an interview. “The proportion of corporate lending will keep going down; it will go below 50 percent eventually,” he added.

Also read: IndoStar Capital Finance IPO: Here’s All You Need To Know

With corporate lending contributing nearly three-quarters of its credit exposure, the non-bank lender’s business has grown at a robust pace since inception in 2011. Between years ended March 2013 and 2017, its total credit exposure and disbursements grew at 30 percent and 14.4 percent, respectively.

It competes with listed lenders to small businesses such as Shriram City Union Finance Ltd., Capital First Ltd., and MAS Financial Services Ltd. and real estate lenders like Piramal Enterprises Ltd.

The company aims to become a dominant player in financing used vehicles for small fleet owners.

In any business unless you carve a niche for yourself, the competition will be intense...with the kind of team we have, in the next few years we would be dominant player in that (used vehicle financing).
R Sridhar, CEO, Indostar Capital Finance

Listing At A Premium

The company listed at a premium of 4.9 percent at Rs 600 per share on the BSE, compared with its issue price of Rs 572. The stock rose as much as 6.08 percent to Rs 606.8 before closing 2.4 percent higher.

The Rs 1,844-crore initial public offering was subscribed 6.8 times during May 9-11. A combination of fresh issue and offer for sale, the IPO would see Everstone Capital-led promoter group IndoStar sell 1.85 crore equity worth Rs 1,058 crore at the upper end of the price band. The price band for the offer had been fixed at Rs 570-Rs 572.

The portion reserved for qualified institutional buyers witnessed strong demand, and was subscribed 16.05 times, while that of retail investors quota was subscribed 1.34 times. The non-institutional segment received 6.92 times more demand than the shares on offer.