The portion of the share sale reserved for qualified institutional investors was subscribed 3.87 times, and that for non-institutional investors and retail investors was subscribed 23% and 2.12 times, respectively.
The public issue consists of a fresh issue of ₹280 crore and an offer for sale of 7.2 crore equity shares by Equitas Holdings to comply with shareholding norms set by the Reserve Bank of India. The shares were sold at a price band of ₹32-33 per share.
"At the upper price band of ₹33, the IPO is priced at 1.25 times post-issue FY20 book value (BV) as valuation looks attractive compared with peers like AU Small Finance Bank (5.35x FY20 BV) and Ujjivan Small Finance Bank 1.89 times" brokerage Anand Rathi said.
Promoter's stake will come down to 82.1% from 95.5% after the IPO. The offer-for-sale(OFS) money will go to Equitas Holdings, the promoter, while the fresh issue proceeds will be used for augmenting its Tier – 1 capital base to meet future capital requirements.
Equitas Small Finance Bank is the largest SFB in India in terms of number of banking outlets, and the second-largest SFB in India in terms of AUM and total deposits as of financial year 2019.
In an interaction with Mint on 16 October, managing director and chief executive officer P.N. Vasudevan said the bank is looking at inorganic growth opportunities to bring down the promoter stake post completion of the initial public offering process. He said that the bank is looking to acquire a housing finance company or a non-banking finance company. According to regulatory guidelines, the promoter has to reduce stake in an SFB to 40% before September next year
“There are two routes available at the bank level, which will dilute the hold co. One is M&A and the other is block sale by the hold co. We have been on the job for many months. We will look at an HFC or an NBFC," said Vasudevan.