SEBI puts Jaipur-based SK Finance IPO in abeyance; details here

The Securities and Exchange Board of India (Sebi) has put on hold the proposed initial public offering (IPO) of SK Finance, a non-bank lender focused on vehicle finance and business loans. Without specifying reasons, Sebi stated that the "issuance of observations (has been) kept in abeyance," as per an update on its website on Monday.

SK Finance, based in Jaipur, had submitted its preliminary papers to Sebi in May this year. According to the draft papers, the IPO comprises a fresh issue of equity shares worth ₹500 crore and an offer for sale (OFS) of up to ₹1,700 crore by promoters and investor shareholders.

Under the OFS, Norwest Venture Partners X-Mauritius and TPG Growth IV SF PTE Ltd plan to sell shares worth ₹700 crore each, while Evolvence Coinvest I will divest shares amounting to ₹75 crore and Evolvence India Fund III Ltd intends to sell shares worth ₹25 crore. Additionally, promoters Rajendra Kumar Setia and Rajendra Kumar Setia HUF will collectively sell shares worth ₹180 crore and ₹20 crore, respectively, as per the draft red herring prospectus (DRHP).

Proceeds from the fresh issue are intended by SK Finance to bolster its capital base for future lending activities and general corporate purposes.

The NBFC operates in two sectors—vehicle financing and financing for Micro, Small, and Medium Enterprises (MSMEs)—with a presence across 11 states and one Union Territory through 535 branches as of December 2023.

According to a Crisil report, the vehicle financing segment in India was valued at approximately ₹11.85 lakh crore as of fiscal 2023, with a compound annual growth rate (CAGR) of around 11% from fiscal 2019. The outstanding credit in this segment is projected to grow at a CAGR of 16-18% from fiscal 2023 to fiscal 2027, reaching ₹21 lakh crore.

Earlier this year, SK Finance raised ₹1,328 crore from investors, with Motilal Oswal Private Equity investing ₹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 for the IPO.

The shares of SK Finance are proposed to be  listed on both exchanges - NSE and BSE.

(With inputs from PTI)