SK Finance has filed preliminary draft papers with capital markets regulator Securities and Exchange Board of India (SEBI) to garner ₹2,200 crore through an initial share sale.

The proposed initial public offer (IPO) is a combination of a fresh issue of equity shares worth ₹500 crore and an offer for sale (OFS) of up to ₹1,700 crore by promoters and investor shareholders, according to the draft red herring prospectus (DRHP) filed on Wednesday.

As a part of the OFS, Norwest Venture Partners X-Mauritius and TPG Growth IV SF PTE Ltd will offload shares worth ₹700 crore each, Evolvence Coinvest I will divest shares to the tune of ₹75 crore and Evolvence India Fund III Ltd will sell shares worth ₹25 crore.

Additionally, promoters - Rajendra Kumar Setia and Rajendra Kumar Setia HUF - will offload shares aggregating to ₹180 crore and ₹20 crore, respectively.

The Jaipur-based SK Finance plans to utilize proceeds from the fresh issue for augmenting the capital base to meet future business requirements of the company towards onward lending and for general corporate purposes.

The vehicle finance and business loans-focused non-bank lender has been operating in two verticals - vehicle financing and financing for Micro, Small and Medium Enterprises (MSMEs). It has a presence across 11 states and one union territory through 535 branches as of December 2023.

According to a Crisil report, the overall vehicle financing segment in India stood at around ₹11.85 lakh crore as of FY23, marking a compound annual growth rate (CAGR) of around 11 per cent from fiscal 2019 and going forward, the outstanding credit is expected to grow at a CAGR of 16-18 per cent from fiscal 2023 to fiscal 2027 to reach ₹21 lakh crore.

Earlier this year, SK Finance raised ₹1,328 crore from investors. Motilal Oswal Private Equity pumped in ₹415 crore for a minority stake in the NBFC. Kotak Mahindra Capital Company Ltd, Jefferies India Private Ltd, Motilal Oswal Investment Advisors Ltd and Nomura Financial Advisory and Securities (India) Private Ltd are the book-running lead managers to the issue.