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Equitas Small Finance Bank IPO: The lot size is 450
Equitas Small Finance Bank IPO: The lot size is 450

Equitas Small Finance Bank IPO opens this week: 10 things to know

  • The share price band of Equitas Small Finance Bank IPO has fixed at 32- 33
  • A portion of the issue is reserved for shareholders of Equitas Holdings

The IPO of Equitas Small Finance Bank opens on October 20 and closes on October 22. The share price band of the 520 crore IPO has fixed at 32- 33 per equity share. Equitas Small Finance Bank's IPO comprises fresh issue of 85 million shares and offer for sale of 72 million shares mainly to meet the RBI’s listing norms. After the IPO, the stake of Equitas Holdings Limited, the holding company of Equitas Small Finance Bank, will fall to about 82%

Here are 10 things to know about the Equitas Small Finance Bank IPO:

1) Lot size: Bids can be made for a minimum of 450 equity shares and in multiples of 450 equity shares thereafter.

2) Shares of Equitas Small Finance Bank are expected to get listed on November 2.

3) KFin Technologies Private Limited is the registrar of the issue and will manage share allocation and refund.

4) JM Financial Limited, Edelweiss Financial Services Limited, IIFL Securities Limited are the book running lead managers to the offer.

5) The share allocation in Equitas Small Finance Bank IPO is likely to get finalised on October 27.

6) There isn't a discount for shareholders of Equitas Holdings in this issue. A portion of the issue (about 10%) is reserved for this category but to qualify for this category you need to hold at least one share of Equitas Holdings as on the RHP filing date (October 11th).

7) According to RBI norms, the promoter of a small finance bank must reduce their shareholdings in the bank to 40% from five years of operations. Equitas Small Finance Bank will complete its five years of operations in September 2021.

8) The management has indicated that two routes are under consideration for reduction of Equitas Holdings stake in the bank are merger and acquisition and block sale of shares by the holding company. It has also said Equitas Small Finance Bank may also also apply for a universal banking license at an appropriate time.

9) At present, the bank is well capitalised with capital adequacy ratio of around 21% and post the issue it will improve further.

10) In a note, Emkay Global said : We have coverage on Equitas Holdings with a buy rating and a target price of 64 for its superior asset diversification, reasonable liability profile, better management pedigree, healthy return ratios and reasonable valuations. Our current target price for Equitas Holdco implies a per share value of 40 for Equitas Small Finance Bank (assuming a 40% holdco discount), implying a decent upside to the issue price. Thus, we recommend subscribe to small finance bank IPO."

Key risks, it said, include higher geographic presence in Tamil Nadu, promoter stake dilution and higher-than-expected NPA formation.

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