India’s second largest microfinance organization, Spandana Sphoorty Financial Ltd, is expected to hire Citigroup, Inc (NYSE: C), JPMorgan Chase & Co. (NYSE: JPM) and JM Financial to manages its initial public offering, according to a report from Bloomberg BusinessWeek.
The lender is expected to try to raise as much as $400 million by the end of the year, according to the report which cited anonymous sources. The company plans to apply to India’s capital markets regulator as early as next month for approval on an IPO.
Spandana hopes to leverage investor funds following the success of its rival SKS Microfinance Ltd, which raised $348 million in its IPO this summer. The stock rose about 7% since it started trading on India’s stock exchange. Spandana, which is more profitable than SKS Microfinance, reportedly received more than a dozen bids to manage its IPO. The company’s existing stakeholders are expected to sell some of their shares in an IPO.
“We would want to optimally capitalize the company to support growth in outreach and sustain our financial inclusion efforts,” said founder and Managing Director Padmaja Reddy to Bloomberg-Business Week. “We are evaluating our capital requirements based on various determinants.”
Spandana currently has about 5 million borrowers in 12 different states. The organization has distributed about 150 billion rupees or about $3.2 billion in loans during the last decade, Reddy told Bloomberg. Spandana posted a profit of 2.04 billion rupees for its last fiscal year.
