Block deal: Fusion Micro Finance shares in focus as Warburg Pincus arm may sell 9.25% stake today

After reducing stake in IDFC First Bank Ltd earlier this month, the global private equity firm Warburg Pincus may cut stake in Fusion Micro Finance Ltd via block deal on Thursday. A Warburg Pincus associate Honey Rose Investment could offload 9.25 per cent stake in the NBFC-MFI at a floor price of Rs 535 per share, which is at 4.9 per cent discount to Wednesday's closing price, CNBC-TV18 reported.

Earlier, Warburg Pincus, through its affiliate Dayside Investment, sold 9.17 crore shares or 1.3 per cent in the IDFC First Bank. The average price for the deal was Rs 86.10 apiece, valuing the deal at Rs 790 crore.

A Warburg Pincus associate, which was the promoter in Computer Age Management Services Ltd (CAMS), on December 4 exited the company selling 97,59,730 shares at Rs 2,766.47. As per a CNBC-TV18 report earlier, Warburg Pincus was also looking to offload shares in Bharti Airtel via block deals.

IIFL Securities is believed to be the sole broker for the deal. A lock-in period of 60 days would also come into effect when the deal is executed, the report suggested.

On Wednesday, the stock closed at Rs 561.20 on BSE, down 0.9 per cent. The scrip is up 51 per cent year-to-date. September was a stable quarter for Fusion MFI, with better asset quality and strong profitability, Anand Rathi said in a note last month. The key positives were asset quality (gross NPA down 52 basis points sequentially), higher net interest margin (up 20 basis points sequentially) and strong profitability (4.9 per cent return on asset).

"Strong growth and improved collections are expected in H2 FY24. We have a positive outlook on the MFI sector and look favourably at Fusion. We introduce FY26e and maintain a Buy, at a higher 12-mth target price of Rs 725

1.7 times P/BV on the FY26e book," Anand Rathi said last month.

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