Home / Industry / Banking /  Ujjivan expects to start small finance banking operations in 2017

Mumbai: Microfinance lender Ujjivan Financial Services Ltd will launch its initial public offer (IPO) on 28 April and expects to start its small finance bank (SFB) in the first quarter of calendar year 2017, the top management of the company said on Thursday.

“The Reserve Bank of India (RBI) has given a timeline till April 2017 for launching the operations. We are confident that we will be able to do a soft launch of the small finance bank business by in the first quarter of next calendar year," chief financial officer Sudha Suresh told reporters at a press meet in Mumbai.

The company’s significant scale, a geographically well-diversified business, senior management team with banking experience and robust risk management practices will help it in successfully building its small finance banking business, added Suresh.

Through its IPO, Ujjivan plans to raise 358.16 crore. The company has fixed a price band of 207-210 per share. The offer closes on 2 May.

The offer will also see several private equity investors in the company pare their stakes to ensure the company’s compliance with RBI’s norms of foreign ownership for SFBs, which require foreign ownership to be capped at 49%.

Investors selling their shares through the IPO include World Bank arm IFC, impact investment funds Elevar and India Financial Inclusion Fund, Dutch development finance institution FMO, Sarva Capital, Women’s World Banking Capital Partners, Wolfensohn Capital Partners and Mauritius Unitus Corp.

In February, Ujjivan raised fresh capital to the tune of 292 crore in a so-called pre-IPO round. The pre-IPO round and IPO will help the company bring down its foreign shareholding to within 49%, the company said.

“After the pre-IPO round our foreign shareholding stands at around 77% and post the IPO the foreign shareholding will reduce to around 44-45%," said Sudha Suresh. As of 31 March 2015, foreign investors owned 88.69% stake in Ujjivan.

Ujjivan is the second of 10 SFB licensees to start selling shares to the public. Earlier this month, the public offer of Chennai-based microfinance lender Equitas Holdings Ltd that sought to raise 2,176 crore was subscribed almost 17 times.

On Thursday, Equitas’ shares listed on the stock exchanges with a 33.6% premium over its IPO price of 110 per share.

SFBs will offer basic banking services, accept deposits and lend to unserved sections, including small business units, small and marginal farmers, micro and small industries, and entities in the unorganized sector.

For the nine months ended December 2015, Ujjivan reported a profit of 122.3 crore on revenue of 729.6 crore.

As of 31 December, the company served over 2.77 million active customers through 470 branches across 209 districts. Ujjivan’s assets under management stood at 4,589 crore. The company is present in 24 states.

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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