Srei Equipment Finance to raise ~2,000 cr via IPO, dilute 25%

Srei Equipment Finance (SEF), a wholly-owned subsidiary of Srei Infrastructure Finance, plans an initial public offering (IPO), that will result in dilution of up to 25 per cent of the post-issue paid-up equity capital share.

The company expects to raise ~1,800-2,200 crore through the IPO, expected to hit the market in the last quarter of this financial year. The proceeds would be used to fund growth. The company is looking at 20-30 per cent annual growth over the next few years, said Hemant Kanoria, chairman and managing director.

In the June quarter, first of the present financial year, SEF had assets under management of ~23,453 crore. According to D K Vyas, chief executive, the aim is to double this in three years.

Profit after tax in the quarter was ~72 crore, against ~44 crore in the same period a year before. About 90 per cent of the company’s equipment finance business is in construction mining equipment. The company has a market share of 30-35 per cent in equipment finance.

“We’ve been in equipment finance for 28 years and it has been our core business. It is doing very well, and non-performing assets are also coming down. We would further like to increase growth in segments like construction, mining, and health care,” said Kanoria.

In June 2016, Srei Infrastructure completed a share swap deal with BNP Paribas, whereby SEF became a 100 per cent subsidiary. And, BNP Paribas acquired five per cent stake in Srei Infrastructure. The company had announced the deal in December 2015. BNP Paribas Lease Group received 25.15 million equity shares of Srei, representing five per cent of the total paid-up equity share capital, in lieu of its entire shareholding of 29.83 million equity shares of SEF, representing half the total paid-up equity.