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Business News/ Industry / Banking/  AU Financiers finalizes investment banks to manage IPO process
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AU Financiers finalizes investment banks to manage IPO process

Small finance bank licensee AU Financiers plans to sell shares in a pure offer for sale in the first half of 2017

AU Financiers is expecting a final approval to become a small finance bank from RBI by December and to launch operations by April.Premium
AU Financiers is expecting a final approval to become a small finance bank from RBI by December and to launch operations by April.

New Delhi: AU Financiers Ltd, a Jaipur-based non-banking financial company, has finalized four investment bankers to manage its proposed share sale slated for early next year, three people with knowledge of the matter said.

“The bankers include ICICI Securities, Citibank, Kotak Investment Banking and Motilal Oswal," said one of the three persons on condition of anonymity.

“They are targeting it (share sale) in the first half of 2017," said the second person, who too did not wish to be named.

The company, one of the 10 firms to receive RBI’s in-principle approval to start a small finance bank, plans to sell shares in a pure offer for sale (OFS), which will take place after it becomes small finance bank by February, AU Financiers managing director Sanjay Agarwal said in an interview in September.

Spokespersons for AU Financiers, Kotak Investment Banking, Motilal Oswal and Citibank Inc. declined to comment. An email sent and calls made to ICICI Securities went unanswered.

Global Capital, a news portal focused on capital markets, had reported earlier this year that AU Financiers had asked investment bankers for proposals to manage its initial public offering (IPO) to raise as much as $300 million.

AU Financiers is expecting a final approval to become a small finance bank from the Reserve Bank of India (RBI) by December and to launch operations by April.

The NBFC has a presence in the north, west and central regions of India where it will initially have the small finance bank branches.

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So far, Capital Small Finance Bank Ltd and Equitas Holdings Ltd have started operations. The Chennai-based Esaf Microfinance has applied for final approval.

AU Financiers recently cut its foreign holding to 49%, the required threshold for a small finance bank, after Kedaara Capital, ChyrsCapital Investment Advisors India Pvt. Ltd, International Finance Corp. and Warburg Pincus Llc partly exited the company. Motilal Oswal Private Equity made a complete exit.

AU Financiers expects to meet its funding requirements by raising deposits. It is targeting Rs10,000 crore of deposits in the first year of its operations on the back of a strong consumer base, Agarwal had said in September.

At the end of FY16, AU Financiers had assets under management of Rs8,221 crore, up 47.6% from a year ago, according to its annual report.

Raising deposits will be crucial for AU Financiers as it will help the firm lower its cost of funding. Except Capital Small Finance Bank (formerly Capital Local Area Bank), no other small finance bank licence holder has a deposit base.

Equitas Small Finance Bank and Ujjivan Financial Services Ltd have raised Rs2,176 crore and Rs885 crore, respectively, through new share sales.

AU Financiers currently has 298 branches in Rajasthan, Gujarat and Maharashtra, and proposes to increase the number to 400 by March 2018, Agarwal said in the interview.

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Published: 07 Dec 2016, 12:27 AM IST
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