Is it true that Adani group’s NBFC arm is planning a public issue on the bourses?
Answer
Answer
That is absolutely correct. Adani surely appears to be on a listing spree. After listing seven of its companies, including Adani Wilmar, Adani group, it may be all set to list its NBFC arm. Adani Capital, the NBFC arm of the Adani Group, is still a young company but the growth has been quite frenetic. The filing for the IPO is yet to happen but as per preliminary details coming in , the issue size would around Rs1,500 crore and the IPO is expected to value Adani Capital at an indicative valuation of around $2 billion.
Adani Capital is a non-bank lender. While it is backed by the Adani Group, the business model has been still one of an aggressive standalone NBFC and it gets nearly 90% of its business on its own merit and not from group customers. The basic idea of this listing is to be able to get stock as currency for future inorganic growth and also leverage fully the ability to raise incremental capital from the market to fund future plans. It will also provide a valuation benchmark for a fast growing business.
Adani Capital is a small player in India’s finance sector and is largely focussed on the loan market in the range of Rs3 lakhs to Rs30 lakhs. It is positioned as a credit company that effectively leverages technology. Adani Capital uses the power of front-end technology to acquire new customers in an effective and cost efficient manner. It broadly uses the Direct to Consumer (D2C) distribution model with limited dependence on middlemen and agents. Adani Capital was just launched in the year 2017.
Its network is growing at a rapid pace. It currently has 154 branches spread across 8 Indian states. It has 60,000 borrowers and the total lending book today stands at a rather modest Rs3,000 crore. Gross NPAs of the NBFC are under 1% at this point in time, which is healthy for a small NBFC. Adani has seven listed stocks with combined market cap of over $200 billion and Adani Capital will reinforce the capital market value of the group. It is already the third largest group in India by market cap after the Tatas and Reliance group.