Equitas Small Finance Bank Ltd, on Monday, filed its so-called draft red herring prospectus with the markets regulator, becoming the third small finance bank to file for an initial public offering (IPO).
The initial public offering will be a combination of fresh issue and offer for sale, according to the red herring prospectus filed by the bank.
The Chennai-based lender is looking to raise ₹550 crore as fresh capital to augment its tier – 1 capital base and to meet future capital requirements, such as organic growth and expansion.
Through the offer for sale route, the lender’s publicly-listed promoter entity Equitas Holdings Ltd (EHL) plans to sell another 80 million shares.
Collectively, the IPO size is expected to be around Rs1,000 crore, two people aware of the development said, requesting anonymity.
The development comes after Ujjivan Small Finance Bank made a bumper debut on the bourses last week, after witnessing a massive subscription of more than 165 times in its ₹750 crore IPO. The bank’s shares listed with over 50% gain on 12 December.
Having started its operations in 2007 as a non-banking financial company, Equitas got its licence to operate as a small finance bank from the Reserve Bank of India (RBI) on 30 June, 2016 and started operating as an SFB on 5 September, 2016.
The bank offers a range of lending products including, small business loans comprising loans against property, housing loans and agriculture loans to micro-entrepreneurs. It also gives microfinance to joint-lending groups, mainly comprising women, along used and new commercial vehicle loans to drivers and micro-entrepreneurs typically engaged in logistics, micro and small enterprise (MSE) loans to proprietorships, and corporate loans.
As of 30 September, its distribution channels comprised 853 Banking Outlets and 322 ATMs across 15 states and union territories in India. As of six months ended 30 September, the bank’s total loan disbursements stood at ₹4,426 crore and retail deposits stood at ₹2,608 crore.
The bank’s net profit during the period was ₹107 crore, while its net interest income stood at about ₹688 crore. The bank’s debt to equity ratio stood at 6.06%.
Investment banks JM Financial, Edelweiss Financial Services and IIFL Securities are advising the company on the share sale.