Equitas Small Finance Bank IPO
Equitas Small Finance Bank IPO opens on 20 Oct 20 and closes on 22 Oct 20 to raise Rs 517.60 crore with a price band of Rs 32-33 per share. The shares will be allotted on 27 Oct 20, and the bank was listed on the stock exchange on 02 Nov 20.
Equitas Small Finance Bank IPO Details
- Equitas Small Finance Bank is a New Age Bank founded in 2007 as a microfinance lender. At present, ESFB is a subsidiary of Equitas Holdings Limited (EHL), continuing to hold a majority of the stake of 95.49 %.
- ESFB received a banking license from the Reserve Bank of India (RBI) on 30 Jun 16 and began banking operations on 05 Sep 16, and with effect from 04 Feb 17, it became a scheduled commercial bank.
- Headquartered in Chennai, ESFB has the largest number of Banking outlets among SFBs with more than 412 branches located in 15 states and Union Territories and 856 banking outlets.
- The Bank filed Draft Red Herring Prospectus (DRHP) for the proposed IPO with SEBI on 16 Dec 19. The DRHP proposed a primary issue of up to Rs 550 crore and Offer For Sale by Equitas Holdings Limited, the promoter selling shareholder of up to 8,00,00,000 crore shares. However, due to the COVID-19 pandemic and consequent lockdowns across the country, the IPO and listing launch have been delayed.
- ESFB is launching its IPO on 20 Oct 20 to raise Rs. 517.60 crore with a fresh issue of Rs 280 crore and offer for sale of Rs 237.60 crore. The offer also includes a reservation of up to Rs 1 crore shares for eligible employees of ESFB and Rs 51 crore of shares for shareholders of Equitas Holdings Limited (EHL). In consultation with merchant banks, the company could have fixed a price band of Rs 32-33 per share, with the closing date for the issue might be 22 Oct 20. As per the addendum to DRHP filed with SEBI last month, the public issue consists of a fresh issue of 8 crore equity shares and an offer for sale of 7.2 equity shares.
Equitas Small Finance Bank IPO Business Model and Core Strength
- ESFB is a leading small finance bank offering a wide range of banking products and services to customers, focusing on serving the financially unserved and underserved customer segments in India. Its strength lies in promoting financial inclusion within these segments.
- Besides being technologically agile, ESFB enjoys a pan-India presence impacting the customer’s lives through well-diversified loan portfolios, banking services, and non-credit offerings that provide stability.
- It has a proprietary evaluation framework for a cash flow based credit assessment.
- It has an API Banking foundation to drive collaboration and technology-led business, high corporate governance standards, driven by professional management, experienced leadership, and impact-focused employee base.
Objects of the Issues (Equitas Small Finance Bank IPO)
- Under the terms and conditions of the grant of Small Finance Bank (SFB) license by the RBI, the Bank is required to list its shares within three years of commencement of operations, i.e., on or before 04 Sep 19.
- Further, Equitas Holdings Limited (EHL), the promoter of the Bank, is required to retain at least 40% of the shareholding in the Bank till 04 Sep 21.
Peers Comparison
| Name of the Bank | Market Share | Total Income (in millions) | PE | EPS | RoNW |
| Equitas Small Finance Bank | 16% | 29,277.95 | 13.81 | 2.39 | 8.92% |
| AU Small Finance Bank | 33% | 49,919.76 | 32.91 | 22.32 | 15.45% |
| Ujjivan Small Finance Bank | 15% | 30,258.14 | 15.09 | 2.18 | 11.71% |
Loans & Advances Structure
| Type of Loan | % of Gross total advances |
| Small Business Loan (Housing, Agriculture and Small Businesses) | 33.64% |
| Micro Finance | 28.44% |
| Vehicle Finance | 28.19% |
| Corporate | 3.15% |
| Others | 6.58% |
| Total Advances | 100% |
Small Business Loans grow at a CAGR of 53%, and Vehicle Loans grow at a CAGR of 29%.
Issue Details
Equitas Small Finance Bank IPO Details
| Issue Open | 20 Oct 20 – 22 Oct 20 |
| Issue Type | Book Built Issue IPO |
| Issue Size | 517.60 Cr |
| Fresh Issue | 8,00,00,000 Eq Shares of ₹ 10 (aggregating up to ₹ 280.oo Cr) |
| Offer for Sale | 72,000,000 Eq Shares of ₹ 10 (aggregating up to ₹ 237.60 Cr) |
| Face Value | ₹ 10 Per Equity Share |
| Issue Price | ₹ 32 to ₹ 33 Per Equity Share |
| Market Lot | 450 |
| Min Order Quantity | 450 shares |
| Listing At | BSE, NSE |
ESFB IPO Lot Size and Price (Retail)
| Application | Lots | Shares | Amount (Cut-off) |
| Minimum | 1 | 450 | ₹14,850 |
| Maximum | 13 | 5850 | ₹193,050 |
Financial Statement
| Amount (₹ in Million) | |||||
| For the six month period ended on Sep 30, | For the year ended Mar 31, | ||||
| 2019 | 2018 | 2019 | 2018 | 2017 | |
| Total Assets | 172,124.63 | 140,492.07 | 157,626.91 | 133,011.50 | 92,501.28 |
| Total Revenue | 13,659.39 | 11,344.26 | 23,948.32 | 17,729.03 | 12,126.98 |
| Total Expense | 12,594.00 | 10,548.45 | 21,842.66 | 17,410.72 | 11,085.64 |
| Profit After Tax | 1,065.39 | 795.81 | 2,105.66 | 318.31 | 1,041.34 |
Equitas Small Finance Bank Bid Details
| Sl No. | Category | Shares Offered/ Reserved | Subscription Status (No. of times) | ||
| 20 Oct 20 (Day 1) | 21 Oct 20 (Day 2) | 22 Oct 20 (Day 3) | |||
| 1. | QIB | 2,79,75,001 | 0.00 | 0.05 | 3.91 |
| 2. | NII | 2,14,87,500 | 0.03 | 0.05 | 0.22 |
| 3. | RII | 5,01,37,500 | 0.85 | 1.42 | 2.08 |
| 4. | Employees | 3,12,500 | 0.59 | 0.97 | 1.84 |
| 5. | Shareholders | 1,59,37,500 | 0.14 | 0.24 | 0.42 |
| Total | 11,58,50,001 | 0.39 | 0.67 | 1.95 | |
| Book Running Lead Managers to the Offer |
| 1. JM Financial Limited |
| 2. Edelweiss Financial Services Limited |
| 3. IIFL Securities Limited |
| Registrar to the Offer |
KFin Technologies Private Limited Selenium Tower B, Plot No. 31 & 32 Financial District, Nanakramguda, Serilingampally, Hyderabad- 500032 Contact Person: M Murali Krishna |
| Equitas Small Finance Bank Registered and Corporate Office |
| 4th Floor, Phase II, Spencer Plaza, No. 769, Mount Road, Anna Salai, Chennai- 600002, Tamil Nadu, India Tel: +91 44 4299 5000 |