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Fincare Small Finance Bank files draft papers for 1,330 cr IPO

Rajeev Yadav, managing director and chief executive of Fincare Small Finance Bank. Premium
Rajeev Yadav, managing director and chief executive of Fincare Small Finance Bank.

  • The IPO comprises a fresh issue of 330 crore and an offer for sale of 1,000 crore by the bank’s promoter entity Fincare Business Services Ltd.
  • Proceeds from the fresh issue of shares will be used for augmenting the bank’s tier-1 capital base to meet its future capital requirement.

MUMBAI : Mumbai: Fincare Small Finance Bank (Fincare SFB) on Sunday filed a draft red herring prospectus with the markets regulator Securities Exchange Board of India to raise 1,330 crore via an initial public offering (IPO).

Fincare is a "digital-first" SFB with a focus on unbanked and under-banked customers, especially in rural and semi-urban areas.

The IPO comprises a fresh issue of 330 crore and an offer for sale of 1,000 crore by the bank’s promoter entity Fincare Business Services Ltd. Fincare Business holds 78.57% stake in the bank.

On 3 May, Mint reported that the India Business Excellence Fund–III, managed and advised by Motilal Oswal Private Equity (MOPE), invested $25 million in a minority stake in Fincare Small Finance Bank (SFB) through a secondary acquisition.

Fincare SFB is a Bengaluru-based microfinance institution-non-banking financial company turned SFB. Fincare was one of the 10 applicants out of the total of 72 to receive the Reserve Bank of India (RBI) approval for conversion into a SFB under the guidelines for this new class of banks issued by the central bank in 2015.

Before converting into a SFB, the microfinance lender was largely conducting business from two entities, Disha Microfin based in west India and Future Financial Services based in south India, under a single overarching management team. It started banking operations in July 2017.

Proceeds from the fresh issue of shares will be used for augmenting the bank’s tier-1 capital base to meet its future capital requirement.

As of December 2020, its total CRAR stood at 29.90%.

For 2019-20, total income of the bank stood at 1,215.72 crore versus 674.88 crore a year ago. Net profit for the period (31 March 2020) stood at 143.449 crore against 101.98 crore the previous year (31 March 2019).

As of December 2020, gross NPA to advances was at 3.46%, while net NPA to advances stood at 1.88%.

As of December 2020, the lender had provisions amounting to 214.38 crore for loans which includes provisions for increased risk of deterioration of loan portfolio on account of macroeconomic factors caused by the covid-19 pandemic, the bank said in its draft prospectus.

The lender had 2.68 million deposit accounts. Its total deposits were at 5,276.65 crore.

The bank has a network of 528 banking outlets, 219 business correspondent outlets and 108 ATMs spread across 16 states and three Union territories, covering 192 districts and 38,809 villages.

ICICI Securities, Axis Capital, IIFL Securities, SBI Capital Markets and Ambit Pvt. Ltd are managing the bank’s IPO.

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