ICL Fincorp Right Issue Details:

The board of directors of ICL Fincorp Ltd. Has decided to raise funds in order to strengthen its financial position and meet current and future financial needs to support its business operations and branch expansion. Offers:

• The meeting was held on 19 Dec,2022 where the BOD approved right issue of 4,43,34,952 equity shares at Rs. 25/- each for cash on a rights basis to company’s existing equity shareholders in the ratio of 1:1

• These shares are offered to shareholders whose name appears in the Company's register of members on 19 Dec,2022; the record date set by the company's board of directors.

• The issue will be open for 30 days beginning on 2 Jan, 2023 and ending at 5 p.m. on 31 Jan, 2023.

Objective of Right Issue:

The company utilizes the proceeds from issue towards funding the following objects such as;

• Working capital and general corporate purposes
• Business expansion and diversification by opening new branches PAN INDIA

Company Background:

Established in 1991, ICL Fincorp is an NBFC mainly dealing in gold loan business. Its AUM comprises 90% business from Gold loans. The company also deals in other segments like Business Loan, Vehicle loan, Property Loans, health insurance (tie-up with Liberty Videocon) and more. ICL Fincorp’s promoters own a reasonable 49.79% of the stake in the company as of FY20. This share has increased from FY19 when it was at 38.47%. This indicates that the management is positive on the performance of the company going forward. The promoters raised their stake in their last round of fundraising at approximately Rs. 20 per share.

Business Performance: 

ICL Fincorp Has been growing well, as indicated by its branch expansion. It has more than doubled its branches from 77 in 2016 to 163 in 2020 in a period of just 4 years.  The company’s corporate license for Insurance Business is in the final stage of processing and is expected to be implemented by the end of December, 2020. This will generate additional income. The company has acquired 74% stake in Salem Erode Investments, which will increase its footprint by 157 branches across 5 states in South India. The company has an ambitious plan to scale up the branch network to 1000 branches by 2022.

Listing Plans: 

ICL Fincorp Is now eligible to be listed on the BSE under the reverse merger mechanism, after it acquired a substantial 74% stake in Salem Erode Investments(a BSE listed NBFC).Its managing director Mr. KG Anil Kumar informed BusinessLine (click here to read the article) of their intentions to get listed p also confirmed the approvals obtained from SEBI and RBI.

Financial Performance:

During FY20, assets under management of ICL Fincorp Grew by 31% and the growth of on-balance sheet assets was 36%. The business AUM (including on book and assigned and net of provisions) in FY20 was Rs. 249 crores versus Rs. 189 crores achieved in FY19. The company’s Earnings per Share stood at Rs. 0.15/- mainly due to equity dilution carried out during the year.

Future Outlook:

The company’s growth plans are solid, the business model mainly based on gold loan is expected to play out well but an important element of risk is the acquisition of Salem Erode Investments. Any acquisition has potential to create synergies or cause hurdles. Fortunately the target acquired is net debt free, has been growing profits and provides a listing for the parent, thereby offering better prospects to raise funds at better prices for its future growth.