Navi Technologies, the financial services company started by Flipkart co-founder Sachin Bansal, has filed the draft papers with market regulator Securities and Exchange Board of India (SEBI) for its initial public offering (IPO). The digital lending platform, which offers personal loans, home loans, general insurance, asset management services and microfinance loans, aims to raise ₹3,350 crore through this issue.

Most of the proceeds from the IPO will be invested in two subsidiaries of the company – Navi Finserv Private Limited (NFPL) and Navi General Insurance Limited (NGIL). Funding to the two subsidiaries is meant to help them meet their capital requirements for the future. The rest will be utilised for general corporate purposes, the company said in its draft red herring prospectus (DRHP) filed with the markets regulator.

The IPO will consist entirely of fresh issue of equity shares, with the floor price, cap price and issue price determined on the basis of the assessment of market demand by way of the book building process, Navi says in its draft IPO paper. The price band and the minimum bid lot will be announced two days before the issue opens for bidding.

Navi Technologies will issue an unspecified number of equity shares to raise ₹3,350 crore through the IPO route. Promoter Sachin Bansal, who holds 97.77% stake in the company, will not be offloading his shares in this issue.

The company will consider a pre-IPO placement in consultation with the BRLMs. If the pre-IPO placement is undertaken, the fresh issue size will be reduced to the extent of such placement. Of the portion set aside for qualified institutional buyers (QIBs), 60% will be allocated to anchor investors on a discretionary basis. The QIB portion will be accordingly reduced from the shares allocated to anchor investors.

One-third of the anchor investor portion shall be reserved for domestic mutual funds, subject to valid bids from them at or above the anchor investor allocation price. Of the net QIB portion (excluding the anchor investor portion), 5% will be available for allocation on a proportionate basis to mutual funds only, and the remainder will be available for allocation on a proportionate basis to all QIB bidders. Any unsubscribed portion in the anchor investors and mutual funds portion will be added to the net QIB Portion.

Of the net proceeds of the IPO, Navi will invest ₹2,370 crore in NFPL, which looks after the personal and home loan verticals of the group. This fund infusion will provide an adequate capital base to meet applicable capital adequacy ratios prescribed by the RBI and meet future capital requirements over the short to medium term. As of December 31, 2021, gross assets under management (AUM) handled by NFPL stood at ₹1,596.40 crore from 4.8 lakh loan accounts.

Navi will invest another ₹150 crore in NGIL to augment its capital base so that it meets the IRDAI prescribed solvency ratio of 1.5x. This investment will also help the general insurance subsidiary of the Navi group meet its future capital requirements.

The remaining proceeds from the IPO will be used for general corporate purposes, the company said in its DRHP.

Navi has roped in Axis Capital, BofA Securities India, Credit Suisse Securities (India), Edelweiss Financial Services, ICICI Securities and Link Intime India as the book running lead managers (BRLM) for its IPO.

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