Equitas Small Finance Bank’s (SFB) initial public offer (IPO) to raise up to Rs 518 crore will open for subscription on October 20

The company earlier planned to hit the market with a Rs 1,000 crore IPO but the issue size was recently reduced by nearly 50 per cent.

About the Company

Incorporated in 1993, Chennai based Equitas Small Finance Bank Ltd (ESFBL) was the largest small finance bank in India in Fiscal 2019 considering banking outlets and the 2nd largest small finance bank considering assets under management and total deposits.

Unlike other microfinance companies, it has a diversified loan portfolio and less dependence on microfinance business.

With the main focus on financially unserved and underserved customers, the bank offers a wide range of banking products and services.

About IPO

The offer from the unit of Equitas Holdings will comprise a fresh issue of shares worth Rs 280 crore and an offer for sale (OFS) of 7,20,00,000 shares by the parent company.

Promoters Holdings

Currently the promoter and promoter group of Equitas Small Finance Bank holds 95.49% stake in the bank.

What will be the price band?

The lender has fixed a price band of ₹32-33 per share

Subscription date

The IPO opens on October 20, while the closing is set for October 22.

The offer period for anchor investor is one day prior to the bid opening date i.e. October 19, 2020.

Listing Date

The expected date of the listing has been fixed for November 2, 2020.

Lot Size

Bids can be made for a minimum of 450 equity shares and in multiples of 450 equity shares thereafter.

Reserved Subscription

Qualified Institutional Buyers (QIB) will get to bid for 50 per cent of the offer, while retail investors will bid for 35 per cent.

Fifteen per cent quota, meanwhile, is retained for Non-institutional Investors (NII).

Lead Managers

JM Financial, Edelweiss Financial Services and IIFL Securities are appointed as book-running lead managers to the issue.

About Performance of the Bank

Equitas Small Finance Bank had posted a net profit of ₹243 crore for the year ended March 31, 2020 with ratio of gross NPA to advances at 3% and net NPA ratio of 1.66%

Objective for the IPO

The objective of the fresh issue is to augment the bank’s tier-I capital base to meet their future capital requirements such as organics growth and expansion.

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