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The IPO will see Equitas and its investors sell shares worth a little over Rs2,200 crore.
The IPO will see Equitas and its investors sell shares worth a little over Rs2,200 crore.

Equitas to launch IPO on 5 April

Equitas is likely to price its shares in the range of Rs109-110 per share

Mumbai: Equitas Holdings Ltd is all set to become the first listed small finance bank (SFB) in the country, as the company launches its initial public offering (IPO) on 5 April, according to three people aware of the development, who requested anonymity.

The IPO will see Equitas and its investors sell shares worth a little over 2,200 crore, said the first person mentioned above.

Equitas is likely to price its shares in the range of 109-110 per share, said the second person.

At 110, the upper end of the price band, the share sale will value the company at a price-to-book value (PBV) multiple of about 2.2 times, he added.

PBV multiple is a ratio used to value financial institutions.

The share sale will close on 7 April.

On 16 March, Mint had reported that Equitas Holdings was planning to launch its IPO in the first week of April.

The Equitas spokesperson was not available for comment at the time of filing the report.

Chennai-based Equitas Holdings’s share sale will see several existing foreign shareholders trim their holding as part of the Reserve Bank of India’s (RBI) directive on foreign ownership in SFBs. Foreign shareholders held 93% of the equity in Equitas as on 31 March 2015, according to information available in the company’s draft IPO documents filed in October.

Foreign investors that are selling shares in the IPO include Sequoia Capital, World Bank arm International Finance Corp., Dutch development finance institution FMO, Helion Venture Partners, Aavishkaar, India Financial Inclusion Fund, Westbridge Ventures, Lumen Investment Holdings and Aquarius Investments.

Collectively, these investors hold a 67.53% stake in the company.

Equitas founder P.N. Vasudevan, who owns 3.17% stake in the firm, will also sell a part of his holding, according to the prospectus.

The company received approval for its IPO from capital markers regulator Securities and Exchange Board of India (Sebi) on 29 December.

Equitas’s revenue increased 56% to 755.9 crore in 2014-15 from 483.5 crore in the previous year, data from the company’s draft IPO filings show. Last fiscal, the company reported a profit of 106.6 crore, an increase of 44% over the previous year’s profit of 74.1 crore.

The company disbursed fresh loans of 3,606 crore in fiscal 2015.

Another SFB licensee, Ujjivan Financial Services Ltd, also plans to tap the primary markets. Ujjivan filed its draft prospectus with Sebi on 31 December and received regulatory approval last month. However, the company is yet to finalize the launch date for its share sale.

Last month, Ujjivan raised 312 crore from domestic investors in a pre-IPO placement round to convert itself to a small finance bank from a micro-lender. About 33 domestic investors, including institutional investors such as HDFC Standard Life Insurance Co. Ltd, Shriram Life Insurance Co. Ltd and Bajaj Allianz General Insurance Co. Ltd participated in the round.

The pre-IPO placement was done at a PBV multiple of 2.1 times, Mint reported.

So far this year, five companies have raised approximately 2,385 crore through the IPO route.

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