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Equitas Small Finance Bank IPO subscribed 39%, retail portion booked 85% on Day 1

After the IPO, the shareholding of Equitas Holdings in Equitas Small Finance Bank will be reduced to 82 percent from 95.49 percent.

October 21, 2020 / 11:44 AM IST

The initial public offering (IPO) of Equitas Small Finance Bank, a subsidiary of Equitas Holdings, has subscribed 39 percent on October 20, the first day of bidding.

The Rs 518-crore public issue has received bids for 4.54 crore equity shares against an offer size of 11.58 crore equity shares, data available on exchanges show.

The portion set aside for retail investors has seen 84.7 percent subscription, while non-institutional investors' portion subscribed 2.5 percent, but qualified institutional buyers have not started putting bids for the issue yet.

The reserved portion of shareholders of Equitas Holdings witnessed 14 percent subscription and that of employees of Equitas Small Finance Bank 59 percent.

The price band for the issue has been fixed at Rs 32-33 per share. Bids can be made for a minimum of 450 equity shares and in multiples of 450 shares thereafter.


Equitas Small Finance Bank IPO opens: Should you subscribe?

To reduce the promoter's stake in the banking firm in keeping with the RBI regulations, Equitas Holdings decided to launch the IPO of Equitas Small Finance Bank, which consists of a fresh issue of Rs 280 crore and an offer for sale of 7.2 crore shares by Equitas Holdings.

After the IPO, the shareholding of Equitas in Equitas Small Finance Bank will be reduced to 82 percent from 95.49 percent. According to the Reserve Bank of India, the promoter has to reduce the stake in Equitas Bank to 40 percent by September 2021, which means the promoter has a year to divest the remaining 42 percent stake.

Equitas Small Finance Bank IPO: 10 key things to know about the issue

Equitas Holdings is expected to look for merger & acquisition and bulk stake sale. The bank is in the process of seeking in-principle approval from RBI for Equitas Holdings' merger with the bank.

"Strong fundamental performance and adequate liquidity position provides an opportunity to grow business in the future. The bank is being issued at valuation of around 1.23x P/BV at the upper price band of Rs 33 as on Q1FY21. We have a long-term positive view on the stock and recommend subscribe for the issue," Emkay Global said.

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