CSB Bank’s ₹410 crore IPO opens on Friday2 min read . Updated: 19 Nov 2019, 11:01 PM IST
- The proposed IPO will see the private sector lender raise fresh capital of ₹24 crore
- Existing shareholders will sell 19.78 mn shares worth ₹385.71 crore to fully or partially exit the bank
The share sale will close on 26 November, the bank said on Tuesday.
CSB has fixed the price band at ₹193-195 a share, to mop up ₹410 crore at the upper end of the price band. The bids for the offer can be placed for a minimum of 75 shares, and in multiples thereafter.
The proposed IPO will see the company raise fresh capital of ₹24 crore, while existing shareholders will sell 19.78 million shares worth ₹385.71 crore to fully or partially exit the bank.
ICICI Lombard General Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance, Federal Bank and Edelweiss Tokio Life Insurance will fully exit CSB through the IPO.
Axis Capital and IIFL Securities are the lead managers to the issue.
The bank’s promoter, FIH Mauritius Investments Ltd, an investment subsidiary of Fairbridge Capital (Mauritius), which has a 50.09% stake, will not sell its shares in the IPO.
“However, after the IPO, Fairfax’s holding will come down to 49.73%, as the bank will issue 2.4 million fresh shares, which will lead to promoter stake dilution," Rajendran Chinna Veerappan, chief executive and managing director, CSB Bank, said in an interview.
Last year, Canadian billionaire Prem Watsa’s Fairfax India Holdings Corp. took a 51% stake in CSB Bank for about $168 million. This followed a first-of-its-kind approval by the Reserve Bank of India (RBI) to a foreign investment firm to invest in a domestic lender to help turn around the bank. “Fairfax can hold on to 51% for the first five years, then it has to reduce it to 40% over 10 years and over 15 years to 15%. Prem Watsa valued the bank at ₹2,400 crore and brought a 51% stake for ₹1,208 crore. After this issue, the valuation goes to around ₹3,400 crore," he added.
CSB, according to its red herring prospectus, will use the proceeds from the fresh issue to augment its tier-1 capital base for the current fiscal and to meet future capital requirements.
“This issue is basically to comply with the RBI’s requirement, which was stipulated to Watsa, as well as to the bank. The RBI has been chasing us for a listing for the past 10-12 years, but the bank had to postpone its listing for various reasons," Veerappan said.
“The RBI had stipulated that we must go public before September 2019, but we could not comply with the direction because it required various permissions. We will comply with this now and submit the compliance to the RBI. Moreover, since capital adequacy ratio is 22%, there will be no need to raise capital in the near future."
The 98-year-old bank—one of the oldest private lenders in India—had 1.3 million customers as on 30 September. Through its 412 branches and 290 ATMs, the bank primarily lends to individuals, small and medium enterprises and non-resident Indians. It has a strong base in Kerala, which houses more than half of its branches.