Non-Bank Lenders Set to Accelerate IPOs: Focus on Upcoming NBFC Public Offerings
Non-bank financial companies (NBFCs) are gearing up to launch initial public offerings (IPOs) as favorable market conditions emerge. With regulatory support, lower interest rates, and a positive credit environment, several NBFCs have received approvals from the Securities and Exchange Board of India (SEBI) to expedite their listings. Industry experts predict that these companies could collectively raise significant capital, marking a notable shift in the financial landscape.
Favorable Market Conditions for NBFCs
The current financial climate is proving advantageous for NBFCs looking to enter the capital markets. A combination of regulatory changes, ample liquidity in the banking sector, and a favorable interest rate cycle has created a conducive environment for these companies. Ajay Saraf, executive director at ICICI Securities, highlighted that the recent adjustments in regulations and the overall liquidity situation have encouraged NBFCs to pursue IPOs. This trend is expected to accelerate as companies that had previously held back are now poised to take advantage of the market’s upward trajectory.
Several NBFCs have already secured IPO approvals from SEBI, indicating a strong interest in public offerings. Among them, SK Finance, which specializes in vehicle and business loans, along with education loan providers Avanse Financial and Credila Financial, are expected to raise a combined total of ₹13,500 crore. Additionally, Tata Capital, the financial arm of the Tata Group, is anticipated to launch a ₹17,200 crore IPO, which could become one of the largest public offerings this financial year.
Impact of Central Bank Policies
The Reserve Bank of India’s recent decisions have played a crucial role in shaping the funding landscape for NBFCs. The central bank’s move to lower risk weights for NBFC lending, along with a total reduction of 100 basis points in the benchmark repo rate during 2025, is expected to alleviate the funding challenges these companies faced in the previous year. Shreepal Doshi, lead analyst for NBFCs at Equirus Securities, noted that the worst phase of the NBFC credit cycle appears to be behind us. As credit costs begin to ease, there is optimism that capital raising activities will pick up in the coming quarters.
This shift in the credit cycle is significant for NBFCs, which have been navigating a challenging environment. The combination of lower borrowing costs and improved market sentiment is likely to encourage more companies to consider public offerings as a viable option for raising capital.
Private Equity Support for Upcoming IPOs
Many of the NBFCs preparing for IPOs are backed by private equity funds, which are looking to exit their investments either partially or completely. For instance, SK Finance’s investor base includes notable firms such as Norwest Venture Partners, TPG Growth, and Baring Private Equity India. This backing not only provides financial support but also enhances the credibility of these companies as they approach the public markets.
Credila Financial, which has transitioned to primarily being owned by EQT and ChrysCapital, and Veritas Finance, supported by investors like Kedaara Capital and British International Investment, are also in the mix. The involvement of established private equity firms signals confidence in the growth potential of these NBFCs, making them attractive options for investors in the upcoming IPOs.
As the market continues to evolve, the anticipated influx of IPOs from NBFCs could reshape the financial landscape, providing new opportunities for investors and contributing to the overall growth of the sector.
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