SK Finance Ltd., a non-bank lender backed by private equity giant TPG Inc., has decided to put its initial public offering (IPO) plans on hold due to insufficient investor interest. The company, which specializes in vehicle financing and small loans, had initially aimed to raise Rs 2,200 crore but later reduced the offer size to Rs 1,600 crore ($183 million) in an attempt to attract investors.

IPO Timeline and Regulatory Approval

The company had filed its draft IPO prospectus in May last year and received regulatory approval in August. However, the approval is set to expire this week, marking the end of the current IPO attempt.

Weak Market Response

Despite efforts to launch the deal earlier this month, SK Finance faced a lukewarm response from potential investors. The company's decision to reduce the offer size by approximately 27% from Rs 2,200 crore to Rs 1,600 crore failed to generate the necessary momentum for the public offering.

Company Profile

SK Finance focuses on providing financial services to customers with limited access to traditional banking services. The company's primary offerings include:

1. Vehicle financing
2. Small loans

In addition to TPG Inc., SK Finance is also backed by Norwest Venture Partners, highlighting the strong private equity interest in the company despite the current market challenges.

IPO Management

The now-shelved IPO was being managed by a consortium of reputable financial institutions:

• Kotak Mahindra Capital Co.
• Jefferies Financial Group Inc.
• Motilal Oswal Investment Advisors
• Nomura Holdings Inc.

These firms were serving as book-running lead managers for the proposed public offering.

Market Implications

The decision to shelve the IPO highlights the current challenges in the Indian primary market, particularly for financial services companies. It also underscores the importance of timing and market sentiment in successful public offerings, even for companies with strong private equity backing.

As the Indian IPO market continues to evolve, companies and investors alike will be closely watching for signs of improved market conditions that could support future public offerings in the financial services sector.

SK Finance Ltd., an Indian financing company backed by private equity giant TPG Inc., is gearing up for its initial public offering (IPO) with a revised offer size. The company is expected to open its books for investor subscriptions soon, marking a significant step in its journey to go public.

Reduced IPO Size

The company has decided to reduce the size of its IPO to approximately ₹1,600 crore ($182 million) from the initially planned ₹2,200 crore. This adjustment in the offer size could be a strategic move to align with current market conditions or investor appetite.

Offer Structure

The IPO will comprise two components:

1. Fresh Issue: New shares valued at up to ₹500 crore
2. Offer for Sale: Existing shares worth up to ₹1,100 crore to be sold by current shareholders, including TPG and Norwest Venture Partners

IPO Timeline

Use of Proceeds

The funds raised from the fresh issue will be allocated towards:

• Future business needs, including lending activities
• General corporate purposes

Book Running Lead Managers

SK Finance has enlisted the services of several prominent financial institutions to manage the book-building process:

• Kotak Mahindra Capital Co.
• Jefferies Financial Group Inc.
• Motilal Oswal Investment Advisors
• Nomura Holdings Inc.

This IPO represents a significant opportunity for SK Finance to access public markets and potentially accelerate its growth in the competitive Indian financing sector. Investors will be closely watching the launch as they evaluate this new offering in the market.