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Mumbai: Punjab-based Capital Small Finance Bank Ltd is planning to raise at least 150 crore in private equity funding as it looks to expand its operations, two people aware of the development said. Capital SFB was one of the 10 entities to receive Reserve Bank of India’s (RBI’s) in-principle approval to start small finance bank operations in September 2015. It was the first to start operations in April 2016.

“They have started talking with PE funds to raise fresh capital. They are trying to raise at least 150 crore. The talks are at a preliminary stage right now. Investment bank Edelweiss is advising the bank on the fundraise," said one of the people cited above, requesting anonymity.

The bank will use the capital to grow its loan book and geographic presence, he added.

In October 2017, Capital SFB raised 89 crore from four investors—Pi Ventures Llp, HDFC Standard Life Insurance Co. Ltd, ICICI Prudential Life Insurance Co. Ltd and Small Industries Development Bank of India (Sidbi)—across two tranches, at a valuation of 465 crore, Mint had reported.

Email queries to Capital SFB and Edelweiss on Wednesday remained unanswered.

As on 31 March 2018, Capital Small Finance Bank operated over 100 branches across Punjab, Haryana and Delhi. In 2017-18, it had advances of 1,852.9 crore, an increase of 27% from a year ago, and a deposit base of 2,850.5 crore, up 25% from a year ago, according to its latest annual report. The bank’s revenue grew by 20.5% to 293.8 crore in fiscal 2018, while its net profit grew 17.6% to 19 crore.

Most entities that converted to small finance banks have raised funds in the last couple of years to fund operations and to comply with RBI’s norms for foreign shareholding.

Larger SFBs, such as AU Small Finance Bank Ltd, Equitas Holdings Ltd and Ujjivan Financial Services Ltd, had opted for public listing.

In June 2017, AU Small Finance Bank went public in a 1,900 crore initial public offering, while Equitas and Ujjivan went public in April 2016 to raise 2,078 crore and 885 crore, respectively.

In September 2016, Utkarsh Micro Finance Pvt. Ltd raised 395 crore from RBL Bank Ltd, Sidbi and PE fund Faering Capital, among others, Mint reported. In August 2018, Fincare Business Services Ltd, promoter of Fincare Small Finance Bank, raised 95 crore through a rights issue from existing investors.

ABOUT THE AUTHOR

Swaraj Singh Dhanjal

" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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