ESAF Small Finance Bank Refiles IPO with Reduced Issue Size of Rs 629 crore, Fostering Growth Prospects

ESAF Small Finance Bank has refiled its preliminary papers, aiming to raise Rs 629 crore through an IPO. The revised issue size includes fresh equity shares and an offer for sale (OFS), providing a strategic boost to the bank’s Tier 1 capital base and fueling future expansion plans.

ESAF small finance bank IPO: Key Highlights

  • ESAF Small Finance Bank’s managing director and chief executive, K Paul Thomas, announced the decision to refile the IPO with a lower issue size, expected to enter the market in FY24.
  • The reduced issue size includes fresh issue equity shares worth Rs 486.74 crore and an offer for sale (OFS) of Rs 142.3 crore.
  • Promoters ESAF Financial Holdings, PNB MetLife India Insurance, and Bajaj Allianz Life are selling shares in the OFS.
  • The proceeds from the IPO will be used to enhance the bank’s Tier 1 capital base.
  • The previous IPO filing in October 2021 for Rs 998 crore, including primary issuance and an OFS, lapsed as it was not completed within a year.
  • The bank’s assets under management (AUM) grew to Rs 16,331.26 crore as of March 2023, and deposits rose to Rs 14,665.62 crore in March 2023, translating into a CAGR of nearly 28 per cent.
  • ICICI Securities, DAM Capital Advisors Ltd, and Nuvama Wealth Management Ltd have been appointed as merchant bankers.
  • ESAF Small Finance Bank’s equity shares will be listed on BSE and NSE.

ESAF Small Finance Bank Reduces IPO Issue Size

ESAF Small Finance Bank has made changes to the issue size, which now comprises fresh issue equity shares worth Rs 486.74 crore and an offer for sale (OFS) of Rs 142.3 crore, as mentioned in DRHP-the draft red herring prospectus, submitted to SEBI.

Promoters and Shareholders Involved in the OFS

The shares offered for sale (OFS) in the IPO belong to promoter ESAF Financial Holdings Private Ltd and other shareholders, including PNB MetLife India Insurance Company Ltd and Bajaj Allianz Life Insurance Company Ltd. Currently, ESAF Financial Holdings owns a 62.46 percent stake in the small finance bank, while PNB MetLife and Bajaj Allianz Life own 4.75 percent and 3.89 percent stakes in the bank, respectively.

ESAF Small Finance Bank IPO-Utilization of Funds and Future Plans

The proceeds from the fresh IPO issue will be utilized to enhance ESAF Small Finance Bank’s Tier 1 capital base. This strategic move aims to strengthen the bank’s financial position and support its future growth plans. The decision to refile the IPO with a lower issue size was announced by the bank’s managing director and chief executive, K Paul Thomas, in November 2022, and it is expected to enter the market in FY24.

Previous IPO Attempt and Current Market Position

Earlier, the bank had filed for a Rs 998 crore IPO in October 2021, which included Rs 800 crore of primary issuance and an OFS of Rs 198 crore from existing investors. However, this plan lapsed as it was not completed within a year.

ESAF Small Finance Bank stands as a prominent player among India’s small finance banks, demonstrating exceptional performance in various areas. This includes a significant client base, impressive yield on advances, strong net interest margin, consistent compound annual growth rate (CAGR) in assets under management, total deposit CAGR, focused loan portfolio in rural and semi-urban areas, and maintaining a favourable ratio of microloan advances to gross advances.

ESAF Small Finance Bank- Financial Growth Analysis

ESAF Small Finance Bank has shown robust growth in its assets under management (AUM) and deposits. The bank’s AUM increased from Rs 8,425.93 crore in March 2021 to Rs 16,331.26 crore in March 2023, representing a compound annual growth rate (CAGR) of over 39 percent. Similarly, deposits rose from Rs 8,999.42 crore in March 2021 to Rs 14,665.62 crore in March 2023, indicating a CAGR of nearly 28 percent.

Appointed Merchant Bankers and Listing Exchanges

To advise ESAF Small Finance Bank on the IPO, ICICI Securities, DAM Capital Advisors Ltd, and Nuvama Wealth Management Ltd have been appointed as merchant bankers. The equity shares of the bank will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), providing investors with opportunities to participate in the bank’s growth story.

Conclusion

ESAF Small Finance Bank’s decision to refile its IPO with a reduced issue size signifies its strategic focus on capital enhancement and future expansion. Supported by appointed merchant bankers, ESAF Small Finance Bank’s IPO will provide investors with opportunities to participate in its promising growth story.

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Sources- moneycontrol.com

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