CreditAccess Grameen IPO worth Rs 3.4 billion subscribed 25% on Day 1

Bengaluru-based company  CreditAccess Grameen’s initial public offering (IPO) garnered 25 per cent subscription on Wednesday, the first day of the issue. A day earlier, the microfinance lender had allotted eight million shares worth Rs 3.4 billion to 21 anchor investors, at Rs 422 apiece. 

Shares were allotted at the top-end of the IPO price band of Rs 422 per share. 

Neuberger Berman, Eastspring Investments, Pictet, ICICI Prudential Mutual Fund, Sundaram Mutual Fund and Citibank were among the investors that were made allotment under the anchor category. 

CreditAccess’ IPO comprises fresh equity issuance worth Rs 6.3 billion, and a secondary share sale worth Rs 5 billion. At the top-end of the price band, CreditAccess will have market capitalisation of Rs 60.5 billion after the issue. The microfinance firm focuses on providing micro loans to women in rural areas. 

For the year ended 2017-18, CreditAccess had reported net profit of Rs 1.25 billion on revenues of Rs 87.5 billion. 

The IPO is priced at nearly three times its 2017-18 book value (post-issue basis) and nearly 35 times its 2017-18 earnings. The IPO closes on Friday. 

“The near term looks great for Grameen, thanks to huge capital infusion and  strong growth. However, the long term needs hard thinking — demonetisation has illustrated that even well-run MFIs can lose 5-10 per cent of assets in crisis,” said a note by Antique Stock Broking,  which has an ‘avoid’ rating on the IPO.