The first public offering of MFO shares took place

The entry of the first microfinance company on the share market aroused the interest of retail investors. SmartTechGroup, which owns MFC Karmani, managed to attract about 950 million rubles. At the same time, institutional investors reacted to a rare IPO on the Russian market at the present time rather reservedly. Other participants in the microfinance market believe that now the valuation of shares will be low, and it is possible to maintain the required level of capital without an IPO.

On Monday, July 3, trading in the shares of the SmartTechGroup company began, the only significant asset of which is the IFC Karmani.

In fact, this is the first IPO of a microfinance organization in the Russian market.

The shares were offered in lots for a total of RUB 600 million. (10% of capital) at a price of 2.37 rubles. up to 3.16 rubles. Due to high demand, another 110.7 million shares (about 6% of capital) were sold at 3.16 rubles.

“The placement took place in the format of a direct listing with elements of a classic capital raising by paying for an additional issue with proceeds from the sale of existing shares on the market. The funds will be used to implement the growth strategy and maintain capital adequacy,” the company explained.

In total, about 950 million rubles were raised. According to the Moscow Exchange, the volume of trading in new shares on the first day exceeded 3.37 billion rubles, and the number of transactions exceeded 107 thousand.

As in the course of the IPO of the kick-sharing company “Wosh Holding” last year (see. “Kommersant” December 15, 2022), as well as the Genetico Center for Reproductive Medicine in April, retail investors became the main buyers of securities.

“Now they dominate the stock market, they account for more than 80% of the turnover of the Moscow Exchange, and it was they who acted as buyers of securities,” notes Dmitry Alexandrov, managing director of Ivolga Capital investment company. “There is also a speculative component here: with a small amount of free-float demand will exceed supply, which means that you can count on an increase in prices, which, in turn, leads to additional demand.”

Interviewed institutional investors reacted with restraint to the placement. “This is too small an IPO for us to participate as an institutional investor. We receive commission income from clients’ assets, and taking into account the cost of resources for the assessment of such a company, it is simply inefficient for us to invest in companies of this kind,” said Artem Mayorov, director of the asset management department of Ingosstrakh-Investments Management Company.

Karmani’s experience may encourage other companies in the industry to consider this type of capital raising.

“Successful and promising fintech needs funds in capital for further growth and development,” says Elman Mehdiyev, head of the council of SRO Mir.

However, microfinance market participants have concerns about a fair assessment. “In the context of an unstable macroeconomic situation, market volatility and the finalization of regulatory requirements in the industry, there may be a significant discount in the valuation of companies,” says Kommersant’s interlocutor in a large IFC.

In particular, Moneyman is considering entering the stock market as part of the entire fintech holding – as part of Svoy Bank JSC (former Gazneftbank), the collection bureau ID Collect and the IT company IDF Lab, Anton Khrapykin, Investment Director of IDF Eurasia, said. “The IPO increases the multiplier to be able to raise more debt financing. The presence of tradable shares becomes a strong tool for motivating the team through option programs,” Mr. Khrapykin believes. However, he clarifies that a classic player in the MFI market, due to the rapid turnover of funds and high margins, can maintain a high level of capital without resorting to the placement of public shares.

Polina Trifonova