The company plans to launch its IPO in June, according to the current plans. Bansal, who launched Flipkart in 2007 and exited the firm after the Walmart deal in 2018, holds 97% in the firm. The public issue will be entirely through an issuance of new shares, with no offer-for-sale (OFS) component.
This means Bansal will not sell shares to investors in the planned IPO, sources briefed on the matter told ET. Besides him, Ankit Agarwal, cofounder and chief financial officer at Navi, and Paresh Sukhtankar, former deputy managing director at HDFC Bank, hold stakes in the Bengaluru-based firm. Sukhtankar is also a board observer at Navi.
Bansal, who has invested Rs 4,000 crore of his own capital in Navi, is expected to retain majority control in the firm even after the IPO.
“The company feels it has made progress in the personal loan business and scaled it rapidly. Now, they (Navi) want to turbocharge it and scale. They will need money for solvency needs in financial services businesses,” a person aware of the IPO plans said.
Sources added Navi is tapping the public markets to feed its fast-growing businesses in personal loans and microfinancing (Chaitanya Credit), besides its own mutual fund business. Navi acquired Chaitanya in September 2019.
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While Navi is looking to raise Rs 4,000 crore in the IPO, it will also look to raise at least twice that amount through public later this year for its aggressive debt growth plans, which involve building a loan book worth Rs 20,000 crore over the next two years. The company has charted plans to raise up to Rs 15,000 crore as debt from the public markets over the next two years, sources added.
“To grow its lending business, which already accounts for 90% of its revenues, Navi will have to raise further debt from the markets. The IPO might help Navi, since it may infuse trust amongst investors as its performance and metrics will be out in public,” said one of the people cited above.
Navi is said to have around three million monthly active users, and disbursed personal loans to the tune of Rs 500 crore in February. “If you include microfinance and housing loans, then the disbursal would be around Rs 900-1,000 crore per month,” said another person cited above.
A spokesperson for Navi declined to comment on its IPO plans and business growth.
At present, the Navi Group includes personal and home loan platform Navi Finserv; mutual funds platform Navi Asset Management Company; health insurance vertical Navi General Insurance; and microfinance and lending institution Chaitanya Micro Finance.
At the start of 2020, Chaitanya Micro Finance had filed for a universal bank license from the Reserve Bank of India (RBI) but has yet to acquire the license.
This comes on the back of customers raising concerns over privacy leaks, and the Enforcement Directorate (ED) sending a notice to Bansal for alleged violation of Foreign Exchange Management Act (FEMA) guidelines during his stint in Flipkart. In September, Bansal moved the Madras High Court against the ED’s actions.
Sources now say it is unlikely that Chaitanya will get the license any time soon, and definitely not before the proposed IPO. While the company continues to be in touch with RBI, the central bank is not entirely convinced on giving it a banking license yet.
Recently, Navi Mutual Fund’s chief executive and MD Saurabh Jain, who joined in February 2021, resigned to move to a larger role within the Navi Group. Replacing him was Hari Shyamsunder, who is expected to take charge as CEO, subject to approvals.
New board appointments
Navi has brought on three new board members — Abhijit Bose, head of WhatsApp India; Shripad Nadkarani, an early investor and board member at Paperboat; and Usha Narayanan, former PwC partner. More independent directors will join the board ahead of the IPO, sources added. Anand Sinha, the former deputy governor at Reserve Bank of India, is already on the board as an independent director.
On February 8, ET reported that Navi Technologies had itself converted into a public entity in preparation for a public listing. The company has appointed bankers including ICICI Securities, BofA Securities and Axis Capital to help float its public listing.
Navi’s current loan book is close to Rs 3,600 crore in size. This includes home loans, personal loans and microfinance loans. While personal loans is a scaled vertical for the company, he is looking to accelerate his home loans business too.
News of Navi’s IPO plan comes as India’s listed new-age companies have seen their value erode for a variety of reasons, most recently Russia’s invasion of Ukraine. India’s Life Insurance Corporation has also filed for an IPO but the Ukraine-Russia crisis may put the mammoth public offering on hold.
Other startups such as Delhivery and PharmEasy have got Sebi’s approval for their IPOs but are now unlikely to launch them this financial year. But Navi is plowing ahead. “There will be something or the other – in terms of public issues – that will keep happening and one can’t wait endlessly. Navi has aggressive plans to grow the business and is comfortable with the June timeline unless there are dramatic changes in the world from the current landscape,” a source told ET.
Navi Technologies profit turnedable in fiscal year 2020-21 (FY21), reporting consolidated profits of Rs 71 crore. The company also saw a spike in income as revenues grew to nearly Rs 780 crore in FY21 from Rs 221 crore in FY20. However, the company may not be able to keep up its profitability in FY22 owing to investments on growth and technology, sources aware of the discussions said.