IPO WATCH- Sarwa Capital looks to raise USD 120-125 mn from IPO: Top consumer and structured finance player Sarwa Capital is looking at a USD 300 mn valuation as it looks to raise USD 120-125 mn from a sale of 40% of the company, our friend CEO Hazem Moussa told Bloomberg TV on Monday. While the fair value process is ongoing, Moussa said the company is targeting a share price of between EGP 7-8. The valuation is not off base considering the interest shown in the company’s ongoing roadshow in the GCC and South Africa, he said. Major institutional investors are looking to acquire “a substantial stake” in the company, with offers coming in at a range of 3-5% of the company, said Moussa.

The money raised will be used to boost the equity base overall, which will open up the company’s capacity across the board, he added. This will particularly bolster its securitization bond issuance business, which is dominated by the company as it holds a market share of 79%.

The funds will also be used to expand its lines of business to include an insurance company.

Growing pains? Not so much. Moussa’s sees little risk that its growth would negatively impact its credit business’ impressive 0.3% default rate. Sarwa has been growing 50% annually over the past five years, he noted, and credit know-how is the core of the business, with Sarwa spending the first couple of years developing it so that default rates would not balloon as it grew.

Use of proceeds? Moussa says the company will use the proceeds from the transaction to shore up its equity base, expand into insurance, and “roll out products that increase penetration rates in finance and insurance.” You can catch the full interview here (watch, runtime: 4:57).

Advisers: Beltone Investment Banking is acting as sole global coordinator and bookrunner for the transaction, which is expected to take place sometime in late 3Q2018 or early 4Q2018. Matouk Bassiouny has been tapped as legal counsel.