Bandhan Bank to raise up to Rs 4,473 crore in one of India's biggest banking sector IPOs
Kolkata-based lender Bandhan Bank will be raising up to about Rs 4,473.75 crore from the public through sale of 11.93 crore equity shares, making it one of the biggest IPOs (initial public offering) by a local private sector bank.
The price band of the much-awaited IPO has been finalised at Rs 370-375 per share and the bid would remain open from March 15 to 19. Equity shares of Bandhan Bank are proposed to be listed on both the NSE and BSE, the bank announced on Thursday in the presence of bank heads Uday Kotak and Shikha Sharma. Both their investment banking arms - Kotak Mahindra Capital Company Ltd, Axis Capital Ltd - are merchant bankers for its IPO.
Bandhan Bank received SEBI's approval for the IPO after two months of filing the DRHP (draft red herring prospectus).
The bank will be issuing 11.93 crore shares of face value Rs 10, which is 10 percent of the post-issue share capital of the bank. Out of the total shares, Bandhan Bank is issuing fresh equity shares to the tune of 9.77 crore shares and an offer for sale of up to 2.16 crore shares of its shareholders International Finance Corporation (IFC), part of the World Bank Group and IFC FIG, which hold a combined 4.94 percent stake in the bank.
Both these entities are expected to garner up to Rs 810 crore from the total issue size and from the fresh issue of 9.77 crore equity shares, the microlender will raise up to Rs 3,663.75 crore.
The floor price is 37 times and the cap price is 37.5 times the face value of the equity share. Bids can be made for a minimum of 40 equity shares and in multiples of 40 equity shares thereafter.
This will be the first IPO since Kolhapur-based RBL Bank listed on the bourses in August 2016 raising over Rs 1,200 crore.
Chandrashekhar Ghosh, MD and CEO of Bandhan Bank said, "If we can maintain the efficiency on costs, automatically we can impact the growth and maintain that. This (IPO) will help us to reach to more people to provide financial services to all level of pyramids, the bottom, middle and top of the pyramid."
The bank has maintained a net interest margin of over 8 percent, and cost to income ratio at around 35 percent.
Exuding confidence in the bank and Ghosh, Kotak said, "Going by the track record, Ghosh has managed high margins, low NPAs and pretty tight cost to income ratio which most banks would be delighted to see...I think the confidence in Bandhan Bank comes from the fact that they have demonstrated scalability as of now and if they continue, it will be commendable."
In 2014, Bandhan Bank became the first microfinance institution to get a banking license from Reserve Bank of India (RBI) and commenced operations in August 2015.
Its biggest promoter is Bandhan Financial Holdings Ltd that owns 89.76 percent stake in the bank and the IPO will bring it down to 82 percent. This is required to be brought down to 40 percent once it is listed. Other promoters include Bandhan Financial Services Ltd, Financial Inclusion Trust and North East Financial Inclusion Trust.
Bandhan Bank has appointed five merchant bankers for its IPO including Goldman Sachs (India) Securities Pvt Ltd, Kotak Mahindra Capital Company Ltd, Axis Capital Ltd, JM Financial Institutional Securities and JP Morgan India Private Ltd while Karvy Computershare Private Ltd is the registrar to the issue.Bandhan Bank has a network to 893 branches with 27,300 employees across all states garnering deposits worth Rs 27,233 crore and loan book at Rs 26,378 crore, comprising of largely women customers.