New Delhi, July 30 -- Private equity firm Multiples PE and Avendus Capital's growth-stage platform are likely to see their investments in Veritas Finance Ltd go underwater as the company is expected to price its initial public offering at a discount to the last known secondary transaction that valued it at over $1 billion.

Veritas, a non-banking finance company that primarily lends to micro, small and medium enterprises as well as self-employed individuals, has refiled its draft documents to go public. The development comes 18 months after it first submitted its draft prospectus with the Securities and Exchange Board of India and more than a year after it received regulatory approval. The approval is typically valid for one year.

The revised papers show that Veritas is aiming to raise Rs 900 crore via a fresh issue while some of its investors and shareholders intend to sell 12.83 million shares. Impact investor Lok Capital plans to offload 6.45 million shares and British International Investment will sell 3.7 million shares. Growth Catalyst Partners and Veritas founder D Arulmany are among the other sellers.

The company hasn't shared the IPO pricing. However, the overall issue is likely to be worth around Rs 1,500 crore, VCCircle has gathered. This would imply an offer for sale of Rs 600 crore, valuing the company at around Rs 7,100 crore ($743 million at current exchange rates) post-money or Rs 6,200 crore pre-money.

The expected post-money valuation is a sixth lower than the valuation of Rs 8,500 crore (over $1 billion then) at which existing backers Evolvence India and Lok Capital bought additional stake in the lender from Arulmany in July 2024.

Two other investors, Multiples PE and Avendus Future Leaders Fund II, had bought shares in a deal that valued it at around Rs 6,500 crore in 2023. These two PE funds are likely to see the value of their three-year-old investment marginally fall below the base valuation in the public issue.

Meanwhile, Norwest Venture Partners and PE firm Kedaara Capital will be sitting on a modest upside of 2.3x and 1.9x, respectively, on the blended cost of their investment. Norwest first backed the lender in 2018 and reinvested in 2020-21. Kedaara invested in 2020-21.

Norwest and Kedaara had offered to sell some of their shares worth Rs 550 crore each when the company filed its draft documents last year, but they have opted out of the same in the revised proposal.

Growth Catalyst Partners, another mid-market investment firm that joined the lender's cap table in 2021, has offered to sell over half its stake in the IPO. It is likely to see around 30% absolute gain, translating into an internal rate of return (IRR) of 7% in rupee terms, way below the 20% benchmark.

Veritas' early-stage backers, BII and Lok Capital, will likely generate a multiple of invested capital of 5.0-5.5x on a blended cost basis. Notably, the two had previously part-exited via secondary share sales with higher returns.

Veritas

The company was established in 2015. Over the years, it has expanded its business to include home loans and used commercial vehicle loans, besides MSME and retail loans. Its total assets under management (AUM) were Rs 9,134.3 crore as of March 31, 2026, growing at a compounded annual rate of 26.33% over the last two years.

However, the company's net interest margin shrank from nearly 16% in FY24 to around 14% last year.

Rural business loans continue to be its mainstay even though the segment's contribution to total AUM has declined to under 65% from 75% two years ago. The share of unsecured working capital loans has shrunk while used commercial vehicle loans have added some fresh muscle to the business. Affordable home loans, too, have seen a sharp uptick.

Veritas had 444 branches across 10 states and one union territory in India, as of March 31, 2026. In particular, it has a presence in Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and West Bengal, which accounted for 91.36% of its AUM.

Published by HT Digital Content Services with permission from VC Circle.